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M&S underwhelms again despite buoyant food performance

Last updated: 07:15 09 Jan 2014 GMT, First published: 08:15 09 Jan 2014 GMT

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Marks & Spencer (LON:MKS) delivered another below par trading update despite sterling efforts by its food and online divisions in the run-up to Christmas.

UK sales were 0.2% lower in the 13 weeks to 28 December, dragged down by the clothing and general merchandise arms where sales were 2.1% lower on a like-for-like (lfl) basis. It was the tenth consecutive quarterly fall for M&S's homeware and clothes division.

Food did well, notching up a 1.6% lfl gain while M&S.com’s sales jumped by 22.7%.

Marc Bolland, M&S’s under fire chief executive, said food had enjoyed an excellent quarter with record sales over the Christmas period.

In fact, 23 December saw the retailer’s biggest day ever in food with revenues of £64mln, he added.

General merchandise’s sales decline was blamed on unseasonal weather and higher levels of discounting especially in the run-up to Christmas.

On a more encouraging note, M&S’s much criticised womenswear ranges saw their first pick-up in market share for three years. “We delivered a good performance across key categories including coats, dresses and footwear. We managed stocks tightly, resulting in a clean position at the end of the quarter," Bolland said.

Going forward Bolland said he expects margins in food to be better than expected but discounts in General Merchandise will offset his and leave UK gross margin broadly level on last year. All other guidance remains unchanged.

“Given continued pressure on disposable incomes, we remain cautious about the outlook," Bolland said.

Shares were up slightly in early trading to 445p.

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