The crutch that is Marks & Spencer Group’s food division is providing less of a prop.
Same-store sales in M&S’s food business fell 0.1% in the first quarter, raising question marks over the growth of a business whose expansion has for years compensated for shortcomings in the clothing department. The drop was the second in succession.
“Most people think that the future of Marks & Spencer lies in selling more food than clothing,” said independent analyst Nick Bubb. “The fall in food sales is a setback.” M&S shares fell as much as 4.6% to the lowest in more than three months. Food’s faltering performance was all the more concerning given that the company’s grocery peers have seen a resurgence in sales on the back of food price inflation and a spell of hot, sunny weather. “We have been in fairly long-term growth in food whereas others are playing a recovery game,” Mr Rowe said. “We are continuing to gain market share. We’re quite happy about it.”
M&S failed to share the boost to grocery sales from the hot summer weather because alcoholic drinks comprise a lower proportion of its overall sales, he said. Without the Easter holiday, which flattered this year’s sales by about 0.7%, the performance would have been worse still.
An aggressive store opening plan is eating into demand at existing outlets, according to Mr Rowe. The company plans to open another 250 new Simply Food outlets by 2020, he said.
The performance of food is “puzzlingly disappointing,” according to Jonathan Pritchard, an analyst at Peel Hunt. “All the external conditions should have been favourable for M&S, but the food showing is not a good one.” — ‘Bloomberg
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