Britain's top clothing retailer Marks & Spencer Plc reported on July 15, its seventh consecutive quarter of falling sales, but there were some signs of improvement despite a tough trading environment. Chief Executive Stuart Rose, brought in last year to fend off a hostile bid approach from retail tycoon Philip Green, said there were signs of recovery but would not call a turn in the fortunes of the tarnished retail icon.
"I don't want to say that; it's too early because we are in a very volatile and still very difficult market. But I am encouraged by some of the signs that we're seeing," Rose told a conference call.
Like-for-like sales fell by 5.4 percent in the 14 weeks to July 9, M&S said, following on from a 5.1 percent same-store decline for the 2004/5 financial year. Total clothing sales fell by 9.2 percent, while like-for-like general retail turnover was down by 11.2 percent.
But the CEO emphasised that full-price sales of general merchandise were down just 2.4 percent.
"The comfort you should take from that is that we've said clearly that our margin and cost targets remain unchanged and that our full-price sales are better than they've been for the past three quarters," he said. Some analysts, however, said Rose could only talk of recovery when core clothing sales turned upwards.
"I don't really see the seeds of recovery," said Anne Critchlow at ING Financial Markets.
"The total sales figures are pretty much what we were going for. Margin guidance for the year is the same, so unless you take a very dim or very optimistic view on the year, I don't think the consensus will be changing." Analysts polled by Reuters Estimates pitched this year's pretax profit figure at 692 million pounds ($1.23 billion).
Rose said the company was carrying 40 percent less stock into its summer sale, which starts on Thursday, which should help improve average selling prices and protect margins.
Unlike many of its British retail peers, M&S has also been able to delay the start of its sale by 18 days compared with last year, another sign of a healthier stock position.
And following a high-profile TV marketing campaign, M&S food sales reversed their sagging trend in the first quarter. Total food sales rose 5 percent, with like-for-like sales up 0.7 percent.
Rose has introduced a range of measures in a bid to turn around the tarnished retail icon, including a wholesale renegotiations of supplier contracts, an overhaul of the company's pricing structure and improved stock control.
Sales of entry-level ranges at low prices had been good, and there had been substantial volume growth, he said. But the retail environment has been against him, with five increases in interest rates last year, mounting consumer debt and a weaker housing market contributing to a growing sense of gloom in high streets and shopping malls.
Questions are bound to be asked at the AGM as to when Rose expects the company's share price, currently around 360 pence, to reach the 400 pence level at which Green pitched his indicative offer last year.
Rose, who last year paid 2.3 billion pounds to shareholders in the form of a share buyback worth 70 pence a share, repeated his position on Thursday that investors were right to have supported his recovery plan.
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