British retailer Marks and Spencer posted Thursday sliding sales in the run-up to Christmas, as clothing was hit by unseasonably warm autumn weather in the third quarter. Total sales sank 1.6 percent in the 13 weeks to December 27, compared with the same period of the group's previous financial year, M&S said in a trading update that sent its share price diving.
"Trading in October and November was affected by unseasonal conditions which impacted sales across the clothing sector," the company said. "We deliberately held back the level of discounting especially in December. While this had an adverse impact on sales we delivered a good performance on gross margin." On a like-for-like basis, which strips out the impact of new floor space, British sales fell 2.7 percent in the reporting period, but food rose 0.1 percent. However general merchandise, which includes clothing, sank 5.8 percent - registering the 14th successive quarterly decline.
M&S added that an "unsatisfactory performance" at its e-commerce distribution centre had "strongly impacted" the performance of the division. International sales meanwhile slid 5.8 percent, hit by worsening currency and economic turmoil in the Middle East and Russia. The group's share price sank in response to the disappointing earnings news.
M&S shares tumbled 2.33 percent to 452.40 pence on London's FTSE 100 index of top companies, which was up 1.28 percent at 6,502.17 points. "It is fair to say that the rejuvenation of M&S's clothing offer is at a relatively early stage and it has not yet completely won back the confidence of consumers," said analyst Neil Saunders at retail consultancy Conlumino. "This means that performance can easily be blown off course by negative headwinds, and the gusts certainly blew this Christmas."
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