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You can find the current article at its original source at https://www.theguardian.com/business/2017/jul/11/investors-spooked-slowdown-marks-spencer-food-sales
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| M&S investors spooked by slowdown in food sales | M&S investors spooked by slowdown in food sales |
| (3 days later) | |
| A slowdown in food sales at Marks & Spencer has spooked investors who have increasingly relied on brisk trade in its upmarket food halls to prop up its struggling clothing arm. | A slowdown in food sales at Marks & Spencer has spooked investors who have increasingly relied on brisk trade in its upmarket food halls to prop up its struggling clothing arm. |
| M&S’s shares were marked down by more than 4% after the retailer revealed food sales in stores open more than one year had fallen over the last three months. The 0.1% decline – contrasting with a 0.6% rise pencilled in by analysts – comes at a time when sales of its supermarket rivals have been boosted by inflation and the recent heatwave. Underlying food sales had also declined 2.1% in the previous quarter. | M&S’s shares were marked down by more than 4% after the retailer revealed food sales in stores open more than one year had fallen over the last three months. The 0.1% decline – contrasting with a 0.6% rise pencilled in by analysts – comes at a time when sales of its supermarket rivals have been boosted by inflation and the recent heatwave. Underlying food sales had also declined 2.1% in the previous quarter. |
| “It is a disappointing food number given we have been seeing increasingly resilient UK figures from most of the grocers,” said Shore Capital analysts Darren Shirley. “The question is whether this a quarterly blip?” | “It is a disappointing food number given we have been seeing increasingly resilient UK figures from most of the grocers,” said Shore Capital analysts Darren Shirley. “The question is whether this a quarterly blip?” |
| M&S chief executive Steve Rowe conceded that the retailer had made some mistakes, including removing products from its shelves that customers had missed, while an attempt to cut back on waste had also affected the availability of meat and fish. | M&S chief executive Steve Rowe conceded that the retailer had made some mistakes, including removing products from its shelves that customers had missed, while an attempt to cut back on waste had also affected the availability of meat and fish. |
| There was a need for “stronger promotions”, he said, adding that the performance of stores was also being affected by expansion as new M&S food outlets sprung up on their doorstep. | There was a need for “stronger promotions”, he said, adding that the performance of stores was also being affected by expansion as new M&S food outlets sprung up on their doorstep. |
| “We have been in fairly long-term growth in food whereas others are playing a recovery game,” said Rowe in defence of the performance. “We are continuing to gain [food] market share.” | “We have been in fairly long-term growth in food whereas others are playing a recovery game,” said Rowe in defence of the performance. “We are continuing to gain [food] market share.” |
| Rowe is seeking to revive the 132-year-old retailer’s declining profits. His biggest job is turning around its clothing arm where sales have been falling for several years. | Rowe is seeking to revive the 132-year-old retailer’s declining profits. His biggest job is turning around its clothing arm where sales have been falling for several years. |
| Like-for-like clothing and homeware sales were down 1.2% in the 13 weeks to 1 July, which was an improvement on the 5.9% slump recorded in the previous quarter. | Like-for-like clothing and homeware sales were down 1.2% in the 13 weeks to 1 July, which was an improvement on the 5.9% slump recorded in the previous quarter. |
| Rowe has slashed the number of clothing promotions it runs and said full price clothing sales – a guide to profitability – had increased 7%. “I’m delighted with where we are (on clothing),” he said. “We’ve gained full price market share, volume market share, (and) market share in stores.” | Rowe has slashed the number of clothing promotions it runs and said full price clothing sales – a guide to profitability – had increased 7%. “I’m delighted with where we are (on clothing),” he said. “We’ve gained full price market share, volume market share, (and) market share in stores.” |
| But Rowe also cautioned that consumer confidence had dipped in recent weeks, describing shopper behavour as “volatile” as households juggle rising living costs. “Customers are very much shopping for now and cautious with their spend,” he said. | But Rowe also cautioned that consumer confidence had dipped in recent weeks, describing shopper behavour as “volatile” as households juggle rising living costs. “Customers are very much shopping for now and cautious with their spend,” he said. |
| Traditionally lower margin, M&S’s food aisles generate over half of its sales and about a third of profits. But since taking over in April 2016, Rowe has made it clear that its food halls will become even more important as it decreases the amount of shopfloor space devoted to clothing. Last year the retailer said it would close 30 “full-line” stores – which sell clothing, homewares and food – and convert 45 more into food-only shops. | Traditionally lower margin, M&S’s food aisles generate over half of its sales and about a third of profits. But since taking over in April 2016, Rowe has made it clear that its food halls will become even more important as it decreases the amount of shopfloor space devoted to clothing. Last year the retailer said it would close 30 “full-line” stores – which sell clothing, homewares and food – and convert 45 more into food-only shops. |
| In May, M&S reported a 64% drop in annual profits to £176.4m after £437m of exceptional charges relating to Rowe’s turnaround plan. | In May, M&S reported a 64% drop in annual profits to £176.4m after £437m of exceptional charges relating to Rowe’s turnaround plan. |
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