Next six months 'crucial' for M&S

The boss of Marks & Spencer today said the next six months will be crucial in its recovery drive as it reported another slide in sales.

Chief executive Stuart Rose said there would be “a lot of head-scratching going on” if the company’s turnaround strategy fails to begin working in the next couple of quarters.

M&S said in an update that total like-for-like sales in the fourth quarter dropped by 4.9% while full-year sales were down 5.1% against the previous year.

It blamed poor weather in March for a 6.7% fall in total like-for-like clothing and home sales on a comparable basis in the 13 weeks to April 2, while full-year sales fell 7%.

Like-for-like food sales in its city centre stores suffered, although they stayed strong at its Simply Food and out-of-town shops, falling 3% in the period and by 2.8% in the full year.

M&S said it expected pre-tax profits before one-off items for the 2005 financial year to be between £610m (€892.9m) and £625m (€914.8m), higher than the £600m (€878m)-£625m (€914.8m) it forecast in January.

Mr Rose told reporters that M&S had suffered a slowdown and trading continued to be difficult.

However, he said it had made “steady underlying progress” and the company expects a recovery in 2005.

“I myself would want to see that happen and clearly, if we have not seen it by the fourth quarter this year, there’s going to be some head-scratching going on,” he said.

The group has cut prices, changed its management and squeezed suppliers in a bid to tackle problems including weak trading conditions and stock surpluses earlier this year.

It said it had shifted the stock and that the number of customers coming into its stores and clothing volumes were up for the full year.

Mr Rose said its 129-strong Simply Food chain, which suffered initial problems, was now outperforming its core food business and was “a good operation”.

Mr Rose said the group had tightened cost controls, with savings expected to offset underlying cost inflation, the cost of annual new store space and an anticipated increase of about 8% in rates. He refused to rule out job losses.

“This is not all about losing people, but we’re continuing to review the structures in the business to make sure they’re appropriate,” he said.