Marks & Spencer admits losing touch

Marks & Spencer has admitted losing touch with its shoppers after announcing that it suffered a slump in sales over Christmas.

Sales on a like-for-like basis, excluding income from new and refurbished stores, fell by 5.1% in the 16 weeks to January 20 and by 2.3% in the critical eight-week Christmas trading period to the same date.

Chief executive and chairman Luc Vandevelde says the overall appeal of M&S's adult clothing ranges was simply not good enough.

He says while the number of shoppers coming into the group's stores increased over Christmas, "the inconsistent appeal of our adult clothing ranges caused lower than expected sales". This led to excess stock levels and higher marking down of goods in an effort to clear them.

Sales of clothing, footwear and gifts fell by 9.3% and 4.8% respectively. Food sales fared better, with like-for-like sales ahead 2.1% in the 16 weeks and 2.3% in the eight weeks. The other bright spot was home furnishings, with sales lifting by 9.5% in the 16 weeks and 6.7% in the eight week period.

Mr Vandevelde is optimistic that there are signs of progress, with an improving trend in food and home sales, more cost-effective buying and better margins, particularly in general merchandising.

"But I am under no illusion as to the main challenges facing the business," he says. "We must offer our customers adult clothing ranges of consistently better design and appeal. I am absolutely committed to making this happen."

The group has been focusing on developing a new concept store format, and now has 25 shops with a new look and design. These stores reported a 4% sales increase over the Christmas period.

M&S saw its shares lift as the City digested the figures, which had largely been in line with forecasts or, as one analyst put it, "as bad as expected". By mid-morning, its shares were ahead 4%, or 8.50p, at 208.50p.

One analyst says: "The bottom line is that their ranges are still dreadful. They have been putting money into stores and refurbishment, but they have not seen a significant uplift. They have an awful long way to go."