Home IndustryShops Marks & Spencer’s drop in sales threatens the giant retailer

Marks & Spencer’s drop in sales threatens the giant retailer

by Underlines

Marks & Spencer

Marks & Spencer is due to announce another decline in clothing and homewear sales today, according to analysts at Mintel. The department store has recorded a drop of 3.8% on a like-to-like basis on UK general merchandise sales (clothing and home) in Q3 2012/2013 – including the crucial Christmas trading period, making it the seventh consecutive quarterly fall in underlying general merchandise sales. Food is the area where Marks & Spencer’s performance is outstanding, recording a rise of 4% on its sales and helping the retailer’s final results.

CEO Marc Bolland is under pressure to deliver a turnaround, and new additions to the team like Style Director Belinda Earl are expected to have a positive impact towards more fashionable ranges, since M&S has seen an ageing of its clothing customer base. Consumer research has shown the average clothing shopper, at nearly 49 years old, was by a fair distance the oldest of any major clothing retailer.

“A key plank of Marc Bolland’s revival strategy for M&S is to excel as a multichannel retailer. But multichannel is no panacea – especially if your product isn’t right. We think M&S needs a more wide-ranging overhaul that tackles short-term product issues as well as the weakness of its position as midmarket monolith in an age of more targeted propositions. We estimate full-year general merchandise sales growth (i.e. excluding M&S Food) will come in at around -3.0% for fiscal 2012.” Mintel’s Senior Retail Analyst John Mercer states.

In the meantime, Next, the UK’s second-largest clothing specialist, recently posted full-year UK sales growth of 3.2% for fiscal 2012, is snapping at the heels of M&S in revenue terms. If the growth rates seen in these retailers’ 2012 fiscal years continued (estimated in the case of M&S), Next UK would marginally overtake M&S UK clothing revenues in 2013, and UK general merchandise sales in 2015.

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