Marks & Spencer surprises with sales uplift

M&S posts an unexpected increase in like-for-like sales (just about). But on 'Worse off Wednesday', it couldn't dispel the general gloom...

by James Taylor
Last Updated: 19 Aug 2013
Ordinarily, Marks & Spencer's 0.1% rise in like-for-like sales in the 13 weeks to April 2 would look - well, pretty ordinary. But these are tough times on the high street, and the retail bellwether seems to have done a good job of managing expectations; the City was expecting a decline of something like 3%, so the fact that it scraped into positive territory (albeit by the skin of its teeth) came as a pleasant surprise. Then again, the fact that it managed to boost market share in non-food, despite a like-for-like decline of nearly 4%, shows just how hard it is for retailers at the moment. And it's probably going to get worse before it gets better...

The good news for M&S was that new boss Marc Bolland seems to have sorted out the previously ailing food business: this enjoyed a 3.4% jump in like-for-likes, plus a 0.1% rise in market share. Bolland said this was partly down to the 320 new products M&S launched during the quarter, bringing the total for the year to a whopping 1,900. Apparently its healthy food ranges (i.e. ‘Count on Us’ and ‘Simply Fuller Longer’) have been selling like hot tofu too. Just goes to show the value of pinching your CEO from Morrisons.
        
As for general merchandise (which covers clothes, furniture and so on), the picture was slightly less rosy: a 3.9% drop. On the other hand, some analysts were expecting to see a 6-7% decline, given the general carnage on the high street at the moment; so this was much better than expected. And Bolland reckons it managed to boost market share by 0.3% - so it's clearly not doing as badly as some. Its latest expensive ad campaign may not have won too many plaudits, but it's apparently boosted sales in the last couple of weeks. That will come as a relief (not least to its ad agency, since Bolland's now planning to spend even more money on marketing next year).

Today has been catchily dubbed ‘Worse off Wednesday’, since the tax and spending changes that kick in this morning will apparently cost households a total of about £2.3bn this year (including an expansion of the 40p tax band, an increase in stamp duty, and changes to welfare spending). With inflation still running well above wage growth, it's easy to see why retailers are worried that we'll be reluctant to splash our cash in the coming months.

Bolland admits the coming year will be 'increasingly challenging', given the pressure on incomes (and higher commodity prices). But he also seems to think it's not as bad as some people make out. 'We've seen an environment which is difficult; we're not falling off a cliff,' he told reporters today. He certainly seems to be doing a decent job of steering clear of the precipice at the moment.

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