Marks loses its spark as sales deteriorate

MARKS and Spencer said today that it has seen like-for-like sales tumble after market conditions "deteriorated markedly" since May.

In another sign of the impact that the consumer slowdown is having on some of the UK's biggest retailers, M&S said that like-for-like sales have fallen by 5.3 per cent in the 13 weeks to June 28.

And the company announced a boardroom reshuffle as it bids to increase "the pace of change" in a bid to offset the current market troubles.

Despite the sales dip, chairman and chief executive Sir Stuart Rose said the firm is a "strong business in a weak market" – in contrast to four years ago when it he said it was a "weak business in a strong market".

Overall group sales increased by 1.3 per cent. But UK stores were down 1.5 per cent, with the group's performance held up by 24.5 per cent growth in international sales.

Sir Stuart said: "At our preliminary results in May, we reported a mixed start to our 2008/9 financial year and expressed caution about consumer sentiment.

"Since then, consumer confidence levels have deteriorated markedly and market conditions have become more challenging.

"General merchandise has been affected by the current market conditions, but we are holding market share in clothing, and home continues to outperform.

"Stock levels have been well controlled and our summer sale will start at the same time as last year."

Clothing appeared to suffer worst, falling 3.6 per cent. Food sales increased by 1.6 per cent, although they fell 4.5 per cent on a like-for-like basis.

The company said that the food business has delivered strong growth in the last three years, helped by the continued roll-out of its Simply Food format.

But it said sales had been affected by pressures on consumer spending in the current quarter leading to increased competitor pricing and promotional activity, together with changes to consumer buying patterns.

Sir Stuart said that in order to meet challenging market conditions the firm needs to "increase the pace of change on a number of operating and trading initiatives".

Director of Food Steven Esom is to leave the company with immediate effect, to be replaced by current director of Home and M&S Direct John Dixon.

"Four years ago, M&S was a weak business in a strong market," said Sir Stuart.

"Today, we are a strong business in a weak market.

"Our work to reposition the business in terms of product and values, service and store environment, coupled with our strong balance sheet and cash flows, places us well for the short term while enabling us to continue to invest for the future."