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M&S faces 'challenging' trading M&S faces 'challenging' trading
(20 minutes later)
Retail giant Marks and Spencer has said that trading conditions will remain "very challenging" after reporting a slowdown in UK sales growth.Retail giant Marks and Spencer has said that trading conditions will remain "very challenging" after reporting a slowdown in UK sales growth.
M&S said UK like-for-like sales - which strip out the impact of new stores - rose 2% in the 13 weeks to 30 June, against an 8.2% increase a year ago. M&S said UK like-for-like sales - which strip out the impact of new stores - rose 2% in the 13 weeks to 30 June.
Including all stores, UK sales were up 6.4% while group sales rose 7%. The increase was the lowest for nearly two years and compared with growth of 8.2% a year ago.
The retailer said rising interest rates and "extreme weather" had combined to make trading volatile in the quarter.The retailer said rising interest rates and "extreme weather" had combined to make trading volatile in the quarter.
M&S added like-for-like sales at its general merchandise division were up 2.9% during the period, while like-for-like food sales rose by just 0.7%. Tough times
Including all stores, overall clothing sales rose 3.5% over the quarter, the home section saw sales up 13.4% and food sales climbed 8.5%. We believe that the short term trading environment will remain very challenging Stuart Rose, M&S chief executive class="" href="http://newsvote.bbc.co.uk/1/shared/fds/hi/business/market_data/shares/3/23190/intraday.stm">See M&S's share price
Analysts have been predicting a tougher time for all High Street retailers following five interest rate rises in the past year and with the wettest June on record dampening sales of summer clothes and food.
M&S has enjoyed a renaissance since chief executive Stuart Rose took charge in 2004 - posting a 28.5% increase in annual profit to £965.2m last year - but it has not been able to avoid the tougher trading environment.
"Rising interest rates, general uncertainty over consumer spending, and extreme weather conditions combined to make market conditions particularly volatile over the quarter," Mr Rose said.
"We believe that the short term trading environment will remain very challenging, but our plans are unchanged," he added.
Overseas expansion
M&S said like-for-like sales at its general merchandise division were up 2.9% during the period, while like-for-like food sales rose by just 0.7%.
Including all stores, clothing sales rose 3.5% over the quarter, the home section saw sales up 13.4% and food sales climbed 8.5%.
During the 13 weeks, M&S opened 33 more Simply Food stores, including 21 on BP forecourts.During the 13 weeks, M&S opened 33 more Simply Food stores, including 21 on BP forecourts.
M&S said its international sales had "performed well" over the period with sales rising by 14.8%. The retailer opened 10 stores during the period, including its first stores in Lithuania, Taiwan and Ukraine. M&S said its international sales had "performed well" over the period with sales rising by 14.8%.
It opened 10 stores during the period, including its first stores in Lithuania, Taiwan and Ukraine.
The retailer added that its store modernisation record was on track for it to have 70% of its outlets revamped for the crucial Christmas trading period.The retailer added that its store modernisation record was on track for it to have 70% of its outlets revamped for the crucial Christmas trading period.
However, there was no mention in the trading update about the future of George Davies, designer of the firm's Per Una range.
Recent reports have suggested Mr Davies - who designed ranges for Next and Asda before joining M&S - is not planning to renew his contract in the autumn.