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The BBC's Greg Wood
"It still has problems attracting young female shoppers"
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Wednesday, 19 July, 2000, 17:20 GMT 18:20 UK
M&S: We'll be good again
Marks & Spencer store
M&S has been suffering in recent years
The new chairman of Marks & Spencer has told shareholders it was not a question of if, but when the retail chain is going to recover.

Luc Vandevelde said trading conditions were likely to remain tough as he reported disappointing sales figures for the first four months of the current financial year.

It is not a question of if the company becomes good, but when it becomes good

Luc Vandevelde
Mr Vandevelde, who said more jobs may be cut at the 3,200-strong head office, urged shareholders to be patient.

He said "It is not a question of if the company becomes good, but when it becomes good."

The group was not looking for any quick fixes. "We are realistic that we haven't turned the corner yet," he said.

M&S is in the midst of introducing a raft of measures to halt its recent decline, which has continued since profits collapsed two years ago from 1.1bn to 655.7m.

Credit due

Among changes made has been the acceptance of credit card transactions, which now account for more than 10% of all trade.

Until 18 April the clothing, food and furnishing chain had stood virtually alone on the UK high street in refusing to allow customers to pay by credit card.

In a statement released before the meeting, the company said sales during the past 16 trading weeks were up 0.9% on last year on a like-for-like basis (excluding new stores and floorspace added since last year).

Total sales were up 3.2% when new stores and floorspace were included.

Food continued to be the best performer, with like-for-like sales up 1.8% over the period, and 3.4% in total.

Staying tough

Shareholders had been hoping to see the chain perform better in comparison to 1999, when sales slumped 7%, forcing down profits and the share price.

"We have seen further polarisation within the highly competitive UK clothing market, with better branded offers at one end of the market and discounters at the other end," said Mr Vandevelde in the statement.

"In such an environment, sales for the last quarter show no more than a continued trend of stabilisation in our UK trading position."

He warned that the market "will remain tough for the foreseeable future".

Two prototype "new concept" stores had proved successful, both in terms of sales and customer reaction, with the new look to be rolled out to a further 20 stores, at an average cost of 3m per store.

Shares fall

Despite the upbeat view of prospects analysts described the trading figures as "poor".

"This is a company which could be on the cusp of recovery but there's no evidence of it yet," said Tony Shiret at Credit Suisse First Boston.

M&S shares fell 1.25 pence to 234p, after dropping as low as 223p in earlier trading.

In the past two years they have fallen from 535p, touching a 10 year low of 218p in May.

Marks & Spencer has a high proportion of individual shareholders - including many who bought in when profits first collapsed, on the assumption that for such a big name, recovery was inevitable.

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