M&S weaker-than-expected sales disappoint market

BRITISH clothing and food retailer Marks & Spencer (M&S) disappointed the market yesterday with weaker-than-expected sales in its fourth quarter.

Like-for-like sales fell 3.4%, but the company said profits for the year would remain on target, thanks to effective cost control. Analysts expect the company to report full-year profits in the region of £760 million (€1.1 billion) next month.

"Sales this quarter are clearly not good enough," said chief executive Roger Holmes. He said the group would take action to correct the poor figures by cutting prices for women's clothing to improve their appeal, as well as broadening product ranges and developing more attractive stores.

The group declined to comment on the performance of its Irish stores, but has signalled confidence in the Irish market with a €60 million investment programme over the last two years. M&S opened three food-only outlets last year, in Dublin's IFSC, Dun Laoghaire and Naas, Co Kildare. These brought the total number of M&S stores here to seven, with three clothing and food stores in Dublin and one on Cork's Patrick Street.

It will open two more clothing and food stores in Dublin's Blanchardstown and Dundrum over the next 12 months and is expected to open a second store in Cork or target other cities such as Limerick and Galway. M&S has a further seven stores in Northern Ireland and employs almost 1,500 people on each side of the border.

The company said it would cut prices by an average of 3.5% for its spring/summer women's clothing range. It will also bring in more items at the lower price ranges in a bid to boost sales volumes. Two new senior executives took up their positions in charge of general merchandise and retailing last week. M&S has also beefed up its buying team to counter negative perceptions of its clothing range.

Yesterday's announcement came as a disappointment to investors who had hoped to see the company continue the recovery started in 2002 after a prolonged lacklustre performance. "We are at a different stage than where we were 18 months to two years ago, but our market and our customers move on and we need to improve more quickly in what we can offer them," said Mr Holmes. "We still have more than one million customers coming through our stores each week but we need to do more to convert that customer traffic into sales."

M&S shares closed down 4% at stg£2.64 in London yesterday.