M&S clothes sales slump further

More pressure for Luc Vandevelde

Troubled UK retailer Marks & Spencer has reported a further sharp slump in clothing sales.

Sales in the store's core clothing, footwear and gifts departments were 9.1% lower in the three months to 7 July than they were in the same quarter last year, the retailer has said in a trading update.

Worryingly, the rate of decline has accelerated since the company's previous briefing, which reported sales slowing at a rate of 6.5%.

M&S boss Luc Vandevelde, who has given himself until next May to turn around the ailing High Street giant, admitted he was disappointed by the data.

"The task was tougher than I expected, so it is going to take longer than I expected," he said.

Improvement pledge

But, speaking at the firm's annual meeting, Mr Vandevelde urged shareholders to have patience with the retailer's new management team.

"When I joined I promised results in two years, and I stand by that commitment," he said.

"We should see progressive improvement as we focus on the key areas of products, stores and our people.

"Marks & Spencer... is still a fabulous business with 10 million customers a week visiting our stores."

His comments were broadly welcomed by hundreds of shareholders at the meeting, who have seen the store's stock rise by one third this year, despite disappointing data.

Food sales buoyant

The decline in clothes sales was partly offset by a brisk trade in M&S food halls, where revenue rose 5.9%, a growth rate albeit slower than that being reported by rivals such as Tesco.

M&S - trading snapshot

Clothing, footwear and gifts: -9.1%

Home: -1.5%

Food: + 5.9%

Total: -2.6%

Data: sales, 14 weeks to 7 July, compared with same period 2000

Total sales in the three months to 7 July fell by 2.6%, or 3.4% on a like-for like basis, allowing for new or extended stores, Wednesday's trading statement said.

The retailer blamed the withdrawal of non-M&S branded goods, such as mobile phones, from shelves for a slide in homeware sales.

The results follow a long struggle by M&S to regain form, particularly in the clothing sector, after three successive years of declining profits.

Jeremy Baker, a marketing lecturer, told BBC News 24 that M&S is losing out to low-cost stores such as Asda, as well as design-led chains, including Monsoon.

"There's a lot of affection for M&S... but it doesn't change you anymore," he added.

"You're the same ordinary person that went in there."

Revival plans

But Wednesday's statement revealed plans to open small-scale food focused stores, named Marks & Spencer Simply Food, in an effort to exploit its strength in the sector.

Clothing, footwear and gift sales fell 9.1%.

Two Simply Food shops are being trialled in London this month.

And the retailer will refurbish 90 stores, equivalent some 50% of its floorspace, by March.

"These enhancements will be very visible to customers, substantially improving their shopping experience," Wednesday's briefing said.

The company also reported "positive" feedback to its autumn range of clothes, with the Per Una range, designed by former Next and Asda guru George Davis, set for launch in October.

The clothing division has been further strengthened by the hiring of former Warehouse boss Yasmin Yusuf, and Steve Longdon, former chief executive of BAA's World Duty Free arm.

Critics expected at AGM

The proposals are the latest in a series of revival initiatives implemented by Mr Vandevelde, and follow the decision to pull out of Continental Europe, a move which prompted considerable labour unrest.

M&S said on Wednesday said it would finalise plans for disposing of Continental operations after the close of negotiations with staff.

But while sales have dropped, M&S shares have risen over the past six months on hopes that the firm will be able to boost profits through efficiency improvements.

The company has continued to dump UK suppliers in favour of cheaper foreign manufacturers.

"Although the numbers on the clothing side looked horrendous, the margin improvement probably gives them breathing space until the autumn," said Ashley Willing, a fund manager at Gartmore Investment Management.

In the City, M&S shares closed 0.5p lower at 248.5p on Wednesday.