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Sales at the UK's favourite retailer declined 5.3 per cent in the 28 weeks to 28 June, as conditions on the high street continued to worsen. Sales of general merchandise contracted 6.2 per cent and food sales were down by 4.5 per cent. Director of food, Steven Esom, will leave, to be replaced by John Dixon, the head of home furnishings.
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The tone of the statement, which was brought forward by a week, was unremittingly gloomy. Chairman Sir Stuart Rose said the slowdown was likely to be an across-the-board one, rather than confined to M&S, and that he expected it to go right through into 2009.
Analysts have already begun to downgrade profit forecasts, which had already been nudged downwards by around 20 per cent over the past year as the retail climate darkened. At least M&S is well prepared this time around, with stock levels tightly controlled and market share holding steady. As Sir Stuart points out, the group is now "a strong business in a weak market", whereas a few years ago, the reverse was true.
See also: Consumers choose fashion over furniture
The shares had already lost half their value in six months and fell another 20 per cent on this news. M&S is in better shape than it was in 2001, when they last traded at this level, but until there's evidence of a pick-up, they're fairly priced.
Last IC view: Good value, 401p, 20 May 2008.
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-IC-2.1.3g-prod - 17/03/2010 18:13:09 - ben.wheeler
