Monday, September 27, 1999 Published at 11:29 GMT 12:29 UK
Business: The Company File
M&S reports fresh sales slump
No suiting some people: sales of M&S clothes are still falling
The decline in fortunes at Marks & Spencer showed little sign of ending as it reported sales down sharply in the last six months.
Excluding income from store space added since the same time last year, Marks announced a 7.8% fall in sales during the six months to 25 September.
It said that pre-tax profits for the half-year would be much worse than expected - at between £185m to £195m before exceptional costs.
Food sales fell 1.5% on a like-for-like basis. At the six-month stage last year, pre-tax profits before exceptionals came in at £348m.
The company was prompted to issue the trading statement by growing speculation that its sales were still in trouble.
Such has been the gloom surrounding M&S that the size of sales slump was welcomed in the City with its shares rallying from their recent six year lows.
In its statement M&S confirmed that shoppers held off buying the autumn range during the hot weather of the first two weeks of September.
But then the arrival of rain over the following days had led to sales picking up from the two weeks when sales were reported to have slumped as much as 15%.
Monday's trading warning is the latest twist in what has been a continuing decline in M&S's fortunes.
It started last year with a 41% drop in annual profits after M&S bought too much stock in its much-criticised clothing range.
Peter Salsbury, who took on the chief executive's position early this year, maintained that the corner was being turned.
He said: "We have started a programme of fundamental change, involving every level in the company, and the results will take time to emerge."
He said he was confident that its product ranges were better this season.
BhS sees slowdown too
Since his appointment Mr Salsbury has carried out major cutbacks at the group's management and head office functions and initiated a programme of store modernisations.
It still does not accept credit cards, a position which has become increasingly isolated following John Lewis's decision to start accepting them.
Meanwhile fellow retailer Storehouse said it expects to report a loss of between £15m and £20m in the 28 weeks to October 1999.
Storehouse, owner of BhS and Mothercare, said this was due to a lack of sales momentum, and the higher levels of price-cutting necessary to persuade people to purchase its goods, plus an increase in costs associated with new investment.
For the past six months UK sales at BhS were 4.3% lower than last year, or down 9% on like-for-like basis.
Mothercare's UK sales for the same period were down 3.9%, or 2% on a like-for-like decline.
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