Festive fashion flop rocks Marks & Spencer: But sparkling food sales lift coronavirus gloom
- Marks & Spencer remains two businesses rolled into one
- Food sales – boosted by the High Street giant’s partnership with Ocado – soared 8.7 per cent over the festive period
- But again clothes proved to be the chain’s undoing as sales fell 19.4 per cent in December
Marks & Spencer remains two businesses rolled into one as its food and clothes divisions put in very different performances in the run up to Christmas.
Food sales – boosted by the High Street giant’s partnership with Ocado – soared 8.7 per cent over the festive period as customers snapped up smaller turkeys and hampers.
But again clothes proved to be the chain’s undoing as sales fell 19.4 per cent in December and 25.1 per cent across the whole third quarter.
Worry: Clothes proved to be the chain’s undoing as sales fell 19.4 per cent in December
A strong performance online and a spike in women buying pyjamas as Christmas presents could not plug the gap.
‘The great British public are back in their pyjamas,’ quipped M&S chief Steve Rowe.
Under the 53-year-old, M&S had tried to make its food more affordable, while maintaining premium quality, and analysts said in this part of the business the results show the strategy has worked.
Rowe said: ‘Given the on-off restrictions and distortions in demand patterns, our trading was robust over the Christmas period. Beneath the Covid clouds we saw a very strong performance from the food business including Ocado.’
Upbeat: Under Steve Rowe, M&S had tried to make its food more affordable
But the poor clothing figures meant overall group sales in the month of December were down 3.6 per cent, while for the three months to December 26 sales of £2.52billion were 8.2 per cent lower than last year. ‘It wasn’t what we had hoped or planned for,’ conceded Rowe.
M&S clothing was expected to take a hit given that it relies heavily on in-store sales in town centres and like many retailers it had been forced to close shops in England for the whole of November due to the second lockdown. But analysts warned that many of M&S’s clothes remain unfashionable, despite Rowe’s efforts.
Jonathan Pritchard, analyst at Peel Hunt, said: ‘M&S has never solved the issue. They are trying to be all things to all women.’
To makes matters worse the results come days after rival Next recorded a barn-storming online performance to cushion the blow of its town store closures.
Analysts said M&S could follow Next’s lead and look to sell clothes from third parties online and in store. The retailer recently bid for lingerie firm Victoria’s Secret UK but was beaten by Next. Jaegar, which M&S was linked with earlier this week, could be part of that plan, although Rowe refused to confirm whether he had bought the fashion brand from administration.
But despite the disappointing clothes sales, Rowe remained upbeat and reassured shareholders that M&S was in the right place to weather the latest national lockdown.
He said: ‘We worked very hard over the summer to get our stock in the right shape.’
ASOS CHARGES AHEAD
Asos and M&S both sell clothes but the two retailers are heading in very different directions.
While the 136-year-old Marks posted declining clothes sales over the festive period, online fashion house Asos has charged ahead. So much so it plans to build a customer fulfilment centre in Staffordshire that will employ 2,000 extra staff.
The 437,000 sqft warehouse in Lichfield will open within 12 months.
The project was hailed by outgoing Business Secretary Alok Sharma as ‘exactly the type of long-term commitment we need from businesses.’
Hailing Asos as a ‘great British success story’, Sharma – who is being replaced by Kwasi Kwarteng after taking over as full-time president of the COP26 UN climate summit – said: ‘This job-creating investment in Lichfield is exactly the type of long-term commitment we need from businesses as we build back better from the pandemic.’
The trendy retailer is preparing to report soaring sales for the festive period on Wednesday. Annual profits last year more than quadrupled to £142.1m as it benefited from lockdown trends.