M&S Sees Holiday Apparel, Home Sales Slump
Marks & Spencer made “good progress” repositioning apparel and home goods over the holidays even though overall Q3 sales sagged, it said Friday.
Revenue in apparel and home totaled 787 million pounds ($1.07 billion), declining 25.1 percent and reflecting an in-store sales decline of 46.5 percent, partially offset by strong online sales growth of 47.5 percent. The British retailer said online sales of apparel and home were 353 million pounds ($480.5 million). Total group sales for U.K. and international fell 8.4 percent to 2.77 billion pounds ($3.77 billion). M&S said international revenue fell 10.4 percent, impacted by “changing restrictions across the globe.” The company’s third quarter covers October through December, which includes the periods of lockdowns across the U.K.
“The sales mix remained heavily biased to Covid-influenced product such as sleepwear and leisurewear. As we shift to trusted value many blanket promotions were removed, and the ratio of full price sales improved with full price sales declining a more modest 4.8 percent and online orders more than doubling,” M&S said. “As a result, the stock position as we entered the latest lockdown was strong. The online business, now under the MS2 umbrella, performed well with fulfillment from both Castle Donington and BOSS (our ship from store system) helping to increase volume and release the pressure on store stock.”
But M&S also said that the latest U.K.-wide lockdown could potentially continue until Easter, which would impact store sales. The company said it is “continuing to actively manage” its apparel and home inventory levels and store cost base.
“Given the on-off restrictions and distortions in demand patterns our trading was robust over the Christmas period. More importantly beneath the Covid clouds we saw a very strong performance from the Food business including Ocado Retail and a further acceleration of clothing & home online,” CEO Steve Rowe said. “Near term trading remains very challenging but we are continuing to accelerate change under our Never the Same Again programme to ensure the business emerges from the pandemic in very different shape.”
The company said that the free trade agreement with the European Union will not result in tariffs on core U.K. sales, but there are potential tariffs on goods exported to the EU. It also cited complex administrative processes that are expected to “significantly impact” operations in Ireland and the Czech Republic, as well as its franchise business. M&S said it is currently working to mitigate those impacts.
M&S is slated to report full year results for the 53 weeks ending April 3, 2021 on May 26.