Thursday, July 15, 1999 Published at 12:12 GMT 13:12 UK
Business: The Company File
M&S sales crash
The famous old name's troubles continue
Marks & Spencer's troubles continue to deepen as the UK retailer announced a further sharp fall in sales.
Sales of general merchandise, such as clothing and housewares, dropped by 12.9% in the past three months on a like-for-like basis (excluding sales in new and extended stores), and 9.3% overall.
The result was that overall sales at the company's stores fell by 9.6% on a like-for-like basis.
Its poor sales last autumn were compounded by its buyers then being too cautious in buying up the Spring range - leading to a shortage of stock in shops.
"There's a long way to go. They need to get their ranges right ... and then deliver on top of that a decent customer service in a more modern environment," said Matthew McEachran of Investec Henderson Crosthwaite.
"Trading conditions have remained difficult in the first part of this financial year," said Brian Baldock, who took over as chairman last month when Sir Richard Greenbury decided to step down from the post a year early.
"We have not lost the plot although we admit there are things we could have done better," added Mr Baldock.
Mr Baldock said there were a range of measures being taken to reverse the decline, including the upgrade of 125 stores during the summer and the placing of 2,000 more staff on the shop floor.
The group, which saw its profits almost halve last year following a slump in sales, has also been cutting costs.
Last week, the company revealed it would close six of its 42 stores in continental Europe, four in Germany and two in France, with the loss of 310 jobs.
"We have put in place a significant programme of change and development so far this year, but fundamental change of this nature in a company the size of M&S cannot happen overnight. Our customers will start to see the impact early in the autumn," said M&S.
M&S profits last year fell to £655.7m ($1.03bn) from £1.1bn a year earlier.
Analysts say the UK's best known - and for many years best loved - retailer has suffered from clothing ranges which have both alienated its core customers and failed to attract new ones.
The decline followed a bitter and very public boardroom battle over who would succeed chairman and chief executive Sir Richard Greenbury.
The battle was ultimately won by Peter Salsbury.
The first quarter of M&S's financial year represents only about a fifth of total year profits, with about one third of the first half profit typically generated in September.
The sales figures led to M&S shares falling 10.5p to 378p when trading started in London on Thursday.
But some analysts were tipping the shares for an early rebound as they believed that the retailer had finally seen its fortunes bottom out.
"They won't have the huge markdowns because they haven't got the huge stocks that they had last summer. September is a huge selling month and we rather like the look of their autumn range," said Richard Ratner of Seymour Pierce.
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