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Fall in division sales blights overall sales growth.
Sales in M&S’s Clothing and Home division tarnished the company’s overall sales growth in the final quarter of its 2015/16 financial year. Like for like sales in the division fell by 2.7% in the period.
Although the figure is in the negative territory, the falling proportion of sales was attributed to promotional discounts. The fourth quarter figure surpassed expectations of a 3.4% drop, and was an improvement upon the previous quarter’s fall of 5.8%. Reasons for this better-than-expected result include more products being available from the Spring/Summer range, improvements across range and design, and a decrease in the proportion of promotional discount applied to products.
Food sales were comparatively more promising, but were still lacklustre. The division saw no growth in like-for-like sales, despite increasing its market share to 4.3%. It outperformed the market by around 3.5%, according to the company.
M&S’s overall sales were up by 1.9% in the quarter. The company reported prudent controls on cost and cash management and the completion of a £150m share buyback initiative. Its main focus is now on improving its Clothing and Home business by revamping its customer offer.
“Despite improved sales in both our franchise and owned businesses in International, the previously guided currency pressure and challenging trading conditions are still expected to heavily impact the full year profitability,” said Steve Rowe, who joined the company in 1989 and was promoted to CEO on last week.
“Headwinds will continue to dominate currency exchange markets,” says Charles Purdy, CEO of international payments experts Smart Currency Business. The uncertainty surrounding the UK’s EU Referendum and its resulting market fluctuations will continue to plague businesses which trade internationally, particularly those that do not have any currency hedging strategies in place.”
Image credit | JuliusKielaitis / Shutterstock.com
