Shares in high street stalwart Marks and Spencer (MKS) were on the slide again after the group posted a subdued first quarter trading statement. Food sales did well during the period, up 3.2 per cent or 0.3 per cent on a like-for-like basis, and outperforming the wider UK market.
But sales of general merchandise couldn't maintain the momentum from the final quarter of last year. M&S reported its first increase in underlying sales of general merchandise for four years last quarter, when like-for-like sales of clothing and home furnishings rose 0.7 per cent. But during this financial year's opening quarter, general merchandise sales dipped 0.4 per cent on a like-for-like basis.
The group blamed the miss on heavy promotional activity in June, after a chilly May deterred customers from hitting the shops or topping up their summer wardrobes. The slowdown would naturally disappoint investors who witnessed the media storm surrounding the retailer’s spring clothing collection, in particular the endorsement of a knee-length suede skirt from on-trend socialite Alexa Chung.
Chief executive Marc Bolland is still focused on improving margins at M&S, specifically for clothing and homeware. He claims the company is on track to deliver a gross margin improvement of somewhere between 150 and 200 basis points by the end of the financial year.
On a brighter note, the company's website m&s.com appears to be making up for lost ground after an extensive redesign alienated online shoppers this time last year. Web sales leapt nearly 39 per cent during the quarter, compared with a 13.8 per cent improvement in the final quarter last year. Sales of home furnishings were particularly strong, with more than a third of revenue coming from online transactions.
