Marks and Spencer Group PLC (LON:MKS) have said that their performance has improved over the third quarter in an update on Thursday.
Shares of Marks and Spencer sunk 8.87% on the announcement and trade at 199p. 9/1/20 10:44BST.
The FTSE 250 listed firm said that performance has seen improvements on a like for like basis, however total sales declined in its Clothing and Home sector.
Notably, the period mentioned includes the festive holidays however British supermarkets seemed to have lost ground.
In the 13 weeks period which ended December 28 the firm said that its total UK sales dipped 0.6% year on year to £2.77 billion, however on a like for like basis this was a 0.2% rise.
Total sales were 0.7% lower at £3.02 billion, and this includes its international unit which saw a 2.3% fall in sales to £251 million.
The British supermarket mainly attributed its growth in UK trading to food unit, where sales climbed 1.5% year on year to £1.7 billion. Notably in the food unit, the firm saw a 1.4% rise on a like for like time scale.
The clothes unit, which contributed heavily to a slump back in November saw sales fall again by 3.7% to £1.06 billion and on a like for like basis sales fell 1.7%.
M&S said: “Revenue was adversely impacted by competitor discounting in December and lower furniture dispatches at the start of the quarter. We generated an improved run rate in traffic and orders, started to implement improvements to search and personalisation in the period and launched an instalment payment option.”
Marks and Spencer have left their full year guidance unchanged, which is something that shareholders can hold onto however they warned that gross margins will be at the lower end of expected guidance.
Chief Executive remains optimistic
Chief Executive Steve Rowe said: “The Food business continued to outperform the market and Clothing and Home had a strong start to the quarter, albeit this was followed by a challenging trading environment in the lead up to Christmas.”
“As we drive a faster pace of change, disappointing one-off issues – notably waste and supply chain in the Food business, the shape of buy in Menswear and performance in our Gifting categories – held us back from delivering a stronger result. However, the changes we made earlier in the year in Clothing have arrested the worst of the issues of the first six months and we are progressively building a much stronger team for the future,” he added.
Marks and Spencer going through a tricky period
Despite the firm just under a year ago agreeing a £750 million delivery deal with Ocado (LON:OCDO) the firm has seen a tricky few months across 2019.
In November, the firm saw its profits plunge which alerted an internal crisis.
Chief Executive Steve Rowe alluded to several factors which had caused the slump including blamed the 5.5% decline in like-for-like clothing sales in the first six months of its financial year on supply chain problems and buying errors that meant popular sizes quickly sold out in store and online.
Food sales returned to growth over the period, with like-for-like sales up 0.9%.
The retailer has cut the price of hundreds of everyday products and introduced new ranges in a bid to be seen as a supermarket rather than a convenience chain.
However Marks and Spencer did seem to be proactive as the firm did name Richard Price as the new managing new managing director of its Clothing & Home unit.
Price joined from rival F&F Clothing, Tesco PLC’s (LON:TSCO) fashion arm, and Marks may see the longer term benefits once strategy has been firmly affixed.
