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M&S sees sharp UK sales decline Sales gloom sees M&S shares dive
(40 minutes later)
Marks and Spencer has warned that a slide in consumer confidence has seen its underlying UK sales drop 5.3% in the past three months. Marks and Spencer shares have fallen by about 15% in early trading after it warned that a slide in consumer confidence had hit sales.
Rising pressure on customers' cash meant its food business - which focuses on top end goods - was badly hit. Underlying UK sales dropped 5.3% in the past three months with its food business - which focuses on top end goods - being badly hit.
The director of its food business is leaving the firm immediately as part of a management reshuffle.The director of its food business is leaving the firm immediately as part of a management reshuffle.
M&S said that general merchandise sales also lost ground - but were in-line with the downturn seen by competitors. The news saw shares in other retailers, such as Next, also fall sharply.
M&S said that general merchandise sales had lost ground - but were in-line with the downturn seen by competitors.
'Change'
The iconic High Street retailer had expressed caution about consumer sentiment in May, when it said there had been a "mixed" start to its 2008/9 financial year.The iconic High Street retailer had expressed caution about consumer sentiment in May, when it said there had been a "mixed" start to its 2008/9 financial year.
But chairman Sir Stuart Rose said that since then, "consumer confidence levels have deteriorated markedly and market conditions have become more challenging".But chairman Sir Stuart Rose said that since then, "consumer confidence levels have deteriorated markedly and market conditions have become more challenging".
But he added: "Four years ago, M&S was a weak business in a strong market. Today, we are a strong business in a weak market."But he added: "Four years ago, M&S was a weak business in a strong market. Today, we are a strong business in a weak market."
Change
M&S said like-for-like sales - which strip out the impact of store openings and closures - were down 5.3% in the UK in the 13 weeks to 28 June.M&S said like-for-like sales - which strip out the impact of store openings and closures - were down 5.3% in the UK in the 13 weeks to 28 June.
Like-for-like food sales were down 4.5%, while general merchandise sales fell 6.2%.Like-for-like food sales were down 4.5%, while general merchandise sales fell 6.2%.
M&S has become renowned for its "Simply Food" products - which are marketed as fresh and high quality but are more expensive than some other stores.M&S has become renowned for its "Simply Food" products - which are marketed as fresh and high quality but are more expensive than some other stores.
"Pressures on consumer spending and increased competitor pricing and promotional activity, coupled with changes in consumer buying patterns, have resulted in a significantly weaker performance," Sir Stuart said."Pressures on consumer spending and increased competitor pricing and promotional activity, coupled with changes in consumer buying patterns, have resulted in a significantly weaker performance," Sir Stuart said.
"In order to meet these challenging market conditions, we need to increase the pace of change on a number of operating and trading initiatives""In order to meet these challenging market conditions, we need to increase the pace of change on a number of operating and trading initiatives"
This means the director of food, Steven Esom, is stepping down immediately, and will be replaced by John Dixon, the boss of M&S Home and delivery business M&S Direct.This means the director of food, Steven Esom, is stepping down immediately, and will be replaced by John Dixon, the boss of M&S Home and delivery business M&S Direct.
Last month, M&S gave a hint of the tough High Street environment, lowering the profits the firm has to make for directors to earn bonuses.Last month, M&S gave a hint of the tough High Street environment, lowering the profits the firm has to make for directors to earn bonuses.
M&S profits for the year to the end of March 2009 are expected to be well below the £1bn recorded in the previous year.M&S profits for the year to the end of March 2009 are expected to be well below the £1bn recorded in the previous year.