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Marks & Spencer sales hit by website problems Marks & Spencer sales hit by website problems
(about 4 hours later)
Marks & Spencer has blamed problems on its website for its 12th consecutive quarter of declining sales in its clothing and homeware. Marks & Spencer has blamed problems with its website for its latest decline in sales, intensifying shareholder on chief executive Marc Bolland.
The general merchandise arm posted a 1.5 per cent fall in like-for-like sales for the 13 weeks to 28 June - making it three straight years of quarterly declines for the division - while food grew like-for-like sales by 1.7 per cent. The high street bell-wether — overtaken by Next in the profit stakes this year — chalked up a 12th consecutive sales fall in its prized general merchandise division, which includes its all-important womenswear offering.
Sales at M&S.com were down 8.1 per cent and clothing sales fell 0.6 per cent. The group's total revenues for the period grew 2.3 per cent, though the business said sales were hampered by teething problems after the introduction of a new website earlier this year. Bolland blamed the latest decline on the stuttering launch of the retailer’s website, which analysts labelled a “fiasco”. The share price fell 1 per cent or 5.1p to 428.1p.
Chief executive Bolland said: "We have seen a continued improvement in clothing, although as anticipated the settling in of the new M&S.com site has had an impact on sales." Chairman Robert Swannell was set to give his full backing to the Dutch boss at the Wembley meeting, but serious problems with the £150 million new website helped push like-for-like clothing sales down 0.6 per cent, and overall general merchandising down a worse-than-expected 1.5 per cent.
The figures were announced hours before Bolland and the rest of the board are due to face concerned shareholders at M&S's AGM at Wembley Stadium. The latest decline underlines the challenge faced by M&S’s new UK retail chief Laura Wade-Gery, who has given increased responsibilities last week.
Consultancy Conlumino’s managing director Neil Saunders said: “It is not necessarily that the medicine being taken by Marks & Spencer is wrong; indeed we would argue that many of the measures taken to date are sensible. Bolland insisted the 8.1 per cent fall in web sales was due to a “settling in” period but admitted turnover on the site would not recover until Christmas.
"The problem is that the dosage is far too low. Marks & Spencer’s strategy on clothing lacks oomph and, as a result, comes across as unconvincing to shoppers.” He said: “It is not an issue with the website. The conversion [turning online visits into sales] was expected to be lower because we brought a lot more [editorial] content, but it is now a lot more inspiring. It’s a journey and I’m pleased with the journey.”
But analysts were scathing. Neil Saunders at Conlumino said: “After the significant investments made, a result of very negative sales over the past three months is highly disappointing, especially since this part of the market is witnessing growth in double digits.”
And Clive Black, retail analyst at Shore Capital, said: “The dot.com fiasco — and that is what it looks like, noting as we do many more complaints over praises for the current proposition — leaves a bitter taste for investors, to our minds.”
M&S has struggled with encouraging customers to re-register with the new website. Bolland said 3.2 million of the six million who had previously used the old site had moved across.
He was also unable to say when general merchandising or womenswear sales would return to positive territory.
But Bolland also revealed that despite a fall in clothing sales, M&S was selling more full-priced items and was weaning itself off high levels of promotions.
At the food division, sales continued to impress, up 1.7 per cent, helping total group sales rise 2.3 per cent — and a sign that shoppers are not being enticed away from its food halls to discounters Aldi and Lidl, unlike its supermarket rivals.