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Food enjoys record Christmas week sales

More fashion flops for troubled M&S boss

Marc BollandMarks & Spencer boss Marc Bolland’s hopes of recovering ground in the fashion stakes suffered a further setback because of continuing problems at its Midlands distribution centre.

Sales in its general merchandise division, including womenswear, fell 5.8% in the last quarter after being impacted by unseasonably warm weather and the online disruptions that beset customers before Christmas.

Its distribution centre in Castle Donington, which opened 18 months ago as part of a £1 billion programme of improvements, is said to have processed a third fewer items than had been expected. M&S said this morning: “We have already made progress in addressing this and have now returned to normal delivery proposition.”

The figure undermined a record Christmas week for food when sales rose 17%, outperforming the market by 3%. Food sales over the quarter were up only 0.1%.

M&S said in a trading update that general merchandise had seen a “difficult quarter”.

The new online system has been criticised for being less efficient than the one it replaced. Almost 5 million customers registered on the new site by the start of November, but this is 1 million fewer than on the previous one.

Ironically, the technical problems have been compounded by record online sales. It meant deliveries of many online orders were delayed by up to two weeks.

M&S said the system had “performed well” and that customer satisfaction and conversion continued to improve, resulting in positive sales growth through October and November.

Food has been the big winner for M&S but Mr Bolland’s attempts to tackle the chronic fall in clothing sales have been up against the wrong sort of weather and the challenge of cheaper rivals such as Primark.

However, some say the biggest obstacles to turning around the business are of the retailer’s own making. Critics say the company has gone for the young and trendy shopper who is not M&S’s traditional customer, and some of the ranges have not been universally popular.

The international business was heavily impacted by the worsening currency and macro-economic issues across the Middle East and Russia.

Mr Bolland said:  M&S had a very good Christmas in Food. We delivered record Christmas sales, strongly outperforming the market. We had a difficult quarter in General Merchandise, dominated by unseasonal conditions and an unsatisfactory performance in our e-commerce distribution centre. We maintained our focus on General Merchandise gross margin, with guidance unchanged.”

 

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