Marks & Spencer Group PLC (LON:MKS) had a difficult Christmas trading period but left its full-year guidance unchanged as it made progress with its turnaround plan.
The British retailer reported a 2.2% drop in UK like-for-like sales to £2.78bn for the third quarter ended December 29 with food sales down 2.1% and clothing and home sales down 2.4%.
Analysts had expected a 2.5% decline in food and a 3.0% decrease in clothing and home.
International sales slumped 15.1% to £262mln, reflecting the closure of stores in loss-making markets and the sale of its Hong Kong business to its franchise partner in the Asian region, Al-Fauttaim.
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Total group sales dropped 3.9% to £3.04bn.
“The combination of reducing consumer confidence, mild weather, Black Friday, and widespread discounting by our competitors made November a very challenging trading period,” said chief executive Steve Rowe.
Transformation plan on track
Rowe said the restructuring of the business is on track with efforts to make its clothing ranges “stylish and wearable”, improvements to its online offering, lowering prices on food items and removing multi-buy promotions.
As part of the transformation plan, M&S plans to close 100 shops by 2020 as it looks to move a third of its sales online.
The move has started to pay off with online clothing and home sales in the UK up 14% in the quarter.
“Womenswear online growth significantly outperformed driven by areas including dresses and knitwear reflecting our "Must-Haves" and social media campaigns,” Rowe said.
He said a solid performance in October and ongoing actions to improve the flow of stock in the supply chain resulted in a 25% reduction in stock in the December sale, marking the lowest level in five years.
In food, Rowe said there are early signs of volume growth and expects to see more momentum as the year progresses.
Shares edged up 0.79% to 279p in morning trading.
M&S will 'come out fine', says analyst
"Not as bad as feared - a good microcosm of the high street in general over Christmas - but Marks clearly has a long way to go to turn things around," said Neil Wilson, chief market analyst at Markets.com.
"Full year guidance unchanged. So far not a significant sign of improvement but against a tough backdrop and in the depths of a turnaround it’s too early to write it off. Marks has been here before and come out fine.”