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Marks & Spencer sales hit by too many mince pies and skinny jeans | Business


Marks & Spencer shares have fallen sharply after its Christmas sales were dented by rivals’ discounts as well as its own buying mistakes after it stocked up on too many men’s skinny jeans.

A pickup in trade in M&S food halls over the holiday period helped the high street retailer deliver its first positive quarterly sales in three years but the success of its resurgent food division was overshadowed by higher levels of waste, which eroded profitability.

The chief executive, Steve Rowe, said its clothing division had faced a challenging trading environment in the lead-up to Christmas: “There was unprecedented discounting by competitors between Black Friday and Christmas and that made December a challenging month and affected our gifting sales.”

Clothing sales at M&S stores open more than one year were down 1.7% after an attempt to make its menswear ranges more fashionable backfired – customers told it last year that they were “too old”.

The revamp involved replacing some regular “relaxed” fit trousers with slim and skinny options but the sartorial leap proved too dramatic for its customer base, with the new lines ending up on sale rails. We “got the balance wrong”, Rowe admitted.

He also said there was evidence that Britons were thinking more carefully about the quantity and quality of what they buy, even at Christmas, with demand for the retailer’s women and men’s cashmere jumpers up 15% and 40%, respectively.

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By comparison, sales in its food halls were up 1.4% as shoppers responded to new ranges and lower prices. Sales rose 4% over the all-important holiday fortnight but the retailer bought too much of seasonal lines such as mince pies, leading to waste – although surplus stock was diverted to local charities, including food banks, via its partnership with the Neighbourly app.

The waste generated by the food business had affected the retailer’s profit margins, which it said would now be at the bottom end of analysts’ expectations. M&S shares, which were relegated from the FTSE 100 index last year, tumbled almost 10% to 198p on Thursday morning.

The GlobalData analyst Kate Ormrod said it was clear M&S “remains unable to excite shoppers enough to buy”. She added: “Calling out competitor discounting in December as a reason for underperformance is somewhat feeble given how predictable stronger promotional activity was after such a challenging 2019.”

There were “silver linings” within the results, she said, highlighting the good performance from food, which helped lift underlying UK sales for the group into positive territory at 0.2%, along with unchanged overall profit guidance for the full year.

Clive Black, an analyst at M&S’s house broker Shore Capital, said: “M&S maybe entering one step forward, one step back territory, which is much better than one step forward, three steps back of old. If so, brighter times could be ahead, particularly if a more certain and confident UK shopper emerges after the election.”

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