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Marks and Spencer sees sales drop Marks and Spencer sees sales drop
(about 3 hours later)
Sales at Marks and Spencer have fallen, as the retailer becomes the latest to suffer from tough conditions on the High Street. The sales decline at Marks and Spencer has picked up pace as the retailer continues to suffer from tough conditions on the High Street.
The company said UK like-for-like sales had declined 6.1% in the 13 weeks to September 27. The retailer said UK like-for-like sales had fallen 6.1% in the 13 weeks to 27 September. In the previous quarter sales had dropped by 5.3%.
The fall was M&S's worst quarterly performance since early 2005. M&S head Sir Stuart Rose said consumer confidence remained fragile and the retail environment was unpredictable.
Sir Stuart Rose, the retailer's chairman, said consumer confidence remained fragile and the retail environment was unpredictable. M&S also said it would cut the amount it spent on improving its stores.
"Consumers are increasingly cautious about their budgets," he added. "Capital expenditure this year is now expected to be around £700m, compared to our previous guidance of £800m-£900m," Sir Stuart said.
In this tougher market environment, the retailer planned to cut costs. "Capital expenditure this year is now expected to be around £700m, compared to our previous guidance of £800m-£900m," he added. Customers are being thoughtful about expenditure but that's hardly surprising in the world we live in today Sir Stuart Rose, M&S executive chairman
Like-for-like general merchandise sales were down 6.4%, with food sales 5.9% lower in the same period. BBC business editor Robert Peston said the announcement was significant as it meant M&S would be placing far fewer orders than planned with other businesses.
Overall group sales were up 0.4%, with UK sales down 1.6%. This was in sharp contrast to a 24.2% rise in international sales and a 34% rise in online sales. "That's a graphic illustration of how the horrors of the financial economy are infecting the real economy," he said.
M&S is to report its 2008/09 interim results on 4 November. Sir Stuart told the BBC: "We are being a little bit prudent."
Earlier this month, a worker at M&S was sacked after telling the media that the company planned to cut redundancy pay to staff. "Customers are being thoughtful about expenditure but that's hardly surprising in the world we live in today. We'll cut our cloth according to our means."
Despite the sales slide, M&S's shares jumped on the London market. Analysts welcomed news of the cost cuts and said the sales performance was in line with expectations.
By mid-morning, M&S shares were up 20.25p, or 9.6%, at 230.5p.
International sales up
Like-for-like general merchandise sales - which includes clothing - were down 6.4%, while food sales were down 5.9%.
M&S SECOND-QUARTER SALES Group sales up 0.4%UK sales down 1.6%UK like-for-like sales down 6.1% (General Merchandise -6.4%; Food -5.9%)Online Sales up 34%International sales up 24.2%
Sir Stuart highlighted that looking at total sales, as opposed to like-for-like, gave a slightly different picture. Like-for-like sales exclude the impact of new stores.
"Our food sales are broadly flat in total, because we've been opening some stores, and in clothing the numbers are down about 3% in total terms," he said.
Overall group sales were up 0.4%, with UK sales down 1.6%. However, there was a 24.2% rise in international sales and a 34% rise in online sales.