M&S Food sales drop is ‘concerning’: analyst

Marks and Spencer's food like-for-like sales dropped 0.1%

Marks and Spencer’s (M&S’s) 0.1% drop in like-for-like food sales in its first quarter is concerning, according to Economist Intelligence Unit (EIU), the forecasting and advisory services group.

The fall in like-for-like sales was worrying, given that M&S could usually rely on food to boost its overall performance, EIU said. The Food division reported sales of £1.407M in the 13 weeks to July 1, M&S reported today (July 11).

Economist Intelligence Unit retail analyst Jon Copestake said: “Of more concern [than a drop in like-for-like clothing sales] is the like-for-like fall in food sales being reported, given that food and groceries have represented a bright spot for M&S in recent years.

‘The good news’

“The good news is that food sales are continuing to see fairly solid overall growth, thanks to store openings. Nevertheless, there remains much to do for the incoming chairman [Archie Norman] when he takes the helm in September.”

M&S chief executive Steve Rowe said the retailer had delivered “strong growth” in its Food business over the 13 weeks, after opening more stores and introducing better offers.

Rowe said: “In our Food business, we delivered strong growth from new Simply Food openings, and are prioritising better ranging and stronger promotions.”

On-track to meet expectations

The overall M&S group was on-track to meet its expectations, Rowe said. Group year-on-year sales were up 2.7% to £2.532M (up 1.8% in constant currency).

The fall in Food like-for-like sales came after M&S in May reported a £312.4M drop in profits for last year. In the year to April 1, M&S opened 68 Simply Food stores, but like-for-like food sales fell by 0.8%.

Meanwhile, former ITV and Hobbycraft chairman Archie Norman will join M&S as non-executive chairman from September 1, the retailer revealed in May. Norman will succeed Robert Swannell, who will retire from the board.

M&S trading update – at a glance
  • Food like-for-like sales down 0.1% to £1.407M
  • Fall in like-for-like sales “concerning”, said analyst
  • Group year-on-year sales up 1.8% in constant currency

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