Marks and Spencer Group reported a fresh drop in quarterly clothing revenue and missed estimates for food sales, dealing a blow to chief executive Steve Rowe as he seeks to revive the UK retail bellwether.
Same-store sales in the clothing and home division fell 1.2 per cent in the 13 weeks ending on July 1st, London-based M&S said on Tuesday, having slumped by almost 9 per cent in the comparable period a year ago.
The median analyst estimate was for a decline of 1 per cent. The food business saw same-store sales drop 0.1 per cent, missing estimates for a 0.6 per cent rise.
"There is little evidence of a turnaround in clothing and home," Berenberg analyst Michelle Wilson said in a note. "We believe this will continue to put pressure on profitability."
The lacklustre performance adds to evidence that UK consumers are tightening their purse strings amid a squeeze on disposable incomes that's affected sales at DFS Furniture and Debenhams.
The drop in clothing sales marks the second consecutive quarter that M&S has failed to meet low expectations, and raises questions over whether Rowe’s plan to close 30 UK stores will be drastic enough in the face of a long-term sales decline.
The retailer’s update comes on the same day as a report from Barclaycard showing UK consumer spending growth slowed to 2.5 per cent in June. About 46 percent of those surveyed said they are “feeling the squeeze” from inflation.
M&S is continuing its effort to shift away from selling clothes at a discount and didn’t hold a clearance sale in the period. Full-price clothing sales rose about 7 per cent in the quarter, the company said.
That followed growth of 8 per cent in the second half of last year.