Page last updated at 21:46 GMT, Thursday, 2 October 2008 22:46 UK

Marks and Spencer sees sales drop

Stuart Rose: 'We'll cut our cloth according to our means'

The sales decline at Marks and Spencer has picked up pace as the retailer continues to suffer from tough conditions on the High Street.

The retailer said UK like-for-like sales had fallen 6.1% in the 13 weeks to 27 September. In the previous quarter sales had dropped by 5.3%.

M&S head Sir Stuart Rose said consumer confidence remained fragile and the retail environment was unpredictable.

M&S also said it would cut the amount it spent on improving its stores.

"Capital expenditure this year is now expected to be around 700m, compared to our previous guidance of 800m-900m," Sir Stuart said.

Customers are being thoughtful about expenditure but that's hardly surprising in the world we live in today
Sir Stuart Rose, M&S executive chairman

BBC business editor Robert Peston said the announcement was significant as it meant M&S would be placing far fewer orders than planned with other businesses.

"That's a graphic illustration of how the horrors of the financial economy are infecting the real economy," he said.

Sir Stuart told the BBC: "We are being a little bit prudent."

"Customers are being thoughtful about expenditure but that's hardly surprising in the world we live in today. We'll cut our cloth according to our means."

Despite the sales slide, M&S's shares jumped on the London market. Analysts welcomed news of the cost cuts and said the sales performance was in line with expectations.

M&S shares closed up 8.1%, at 227.25p.

International sales up

Like-for-like general merchandise sales - which includes clothing - were down 6.4%, while food sales were down 5.9%.

Group sales up 0.4%
UK sales down 1.6%
UK like-for-like sales down 6.1% (General Merchandise -6.4%; Food -5.9%)
Online Sales up 34%
International sales up 24.2%

Sir Stuart highlighted that looking at total sales, as opposed to like-for-like, gave a slightly different picture. Like-for-like sales exclude the impact of new stores.

"Our food sales are broadly flat in total, because we've been opening some stores, and in clothing the numbers are down about 3% in total terms," he said.

Overall group sales were up 0.4%, with UK sales down 1.6%. However, there was a 24.2% rise in international sales and a 34% rise in online sales.

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