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 The country's biggest clothing retailer, which also sells upmarket
food, said first-quarter sales were held back by its transition to a
new website, as previously flagged, and kept its full-year profit
guidance.
It said sales of womenswear at stores open over a year were
"slightly higher," without providing a figure. But some analysts
said Chief Executive Marc Bolland, who will face shareholders at an
annual meeting later on Tuesday, still had much to prove.
"It will still take a considerable amount of time for M&S to
demonstrate that it can break the mould, grow its non-food offer,
maintain market share and build earnings," said Shore Capital's
Clive Black, who has a "hold" stance on M&S stock.
Bolland, CEO since 2010, has spent 2.3 billion pounds ($3.9 billion)
over the past three years in a push to address decades of
underinvestment, overseeing the redesign of products and stores and
an overhaul of logistics to serve the new website. However, a new
clothing team he set up in 2012 has failed to deliver a sustained
increase in sales and, for the first time, M&S earned less in the
year to the end of March than its faster-growing rival Next <NXT.L>.
The new website, launched in February, is a pillar of the intended
transformation of the 130-year-old business into an international
retailer reaching customers through stores, the internet, tablets
and mobile devices.
Its "settling in" problems are likely to be among the criticisms
Bolland will face over the firm's underperformance from elements of
M&S's army of private shareholders, who own about 30 percent of the
retailer's equity.
The CEO announced a shuffling of executive responsibilities last
week, putting online boss Laura Wade-Gery in charge of UK retail - a
move which sparked speculation the firm was planning for an eventual
successor to Bolland.
Shares in M&S, down 6 percent over the last year, were 1.6 percent
lower at 426.2 pence at 0935 GMT, valuing the business at about 7
billion pounds.
STEP BY STEP
M&S said like-for-like sales of non-food products, spanning
clothing, footwear and homewares, fell 1.5 percent in the 13 weeks
to June 28 - in line with analysts' forecasts of down 1-2 percent
but worse than a decline of 0.6 percent in the fourth quarter of
M&S's 2013-14 financial year.
"We have seen a continued improvement in clothing, although, as
anticipated, the settling in of the new M&S.com site has had an
impact on sales," said Bolland.
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The firm said M&S.com sales fell 8.1 percent, though there had
recently been a gradual improvement in performance. It said it
expected the site to return to growth ahead of the peak trading
period of November and December.
Finance director Alan Stewart said the website and the firm's new
e-commerce distribution centre at Castle Donington in central
England were performing in line with internal expectations. He said
3.2 million customers had registered for the new site and it
expected to get 6 million eventually.
M&S said that while like-for-like sales in womenswear were positive
thanks to stronger full price sales, overall clothing like-for-like
sales fell 0.6 percent, reversing a 0.6 percent rise in the fourth
quarter. Total clothing sales did, however, edge up 0.1 percent.
“We’re actually very pleased ... Even at a higher level of full
price and a lower level of promotional (activity) we’ve been able to
grow at womenswear and in clothing,” Bolland said.
"We believe that step-by-step we are on the right track," he said,
adding "I'm really committed to what I’m doing."
M&S's food business, which contributes more than half of group sales
but less profit, is performing much better and delivered a 19th
consecutive quarter of growth.
Like-for-like food sales rose 1.7 percent, against analysts'
forecasts of up 1.5-2.5 percent and a fourth-quarter rise of 0.1
percent. The outcome was boosted by the fall of Easter in M&S's
first quarter this year.
(Editing by Kate Holton and Mark Potter)
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