Marks & Spencer puts up creditable Q3 show

Marks & Spencer puts up creditable Q3 show

	Published : Tue, 10 Jan 2006 14:00 By : Andrew Stead Print this Story

LONDON: Marks & Spencer Group Plc. retained its 122-year-old image as Britain's retail icon when it delivered like-for-like sales growth of 2.9 per cent in the third quarter ended 31 December that included the Christmas season sales, against a market expectation of less than 2 per cent. Total U.K. sales rose by 4.9 per cent.

The retailer posted a stronger-than-expected sales performance in the food division than its traditional clothing unit. While non-food like-for-like sales grew by just 0.8 per cent, food sales recorded an appreciable growth of 5.1 per cent.

The cold weather conditions in the country helped boost a subdued clothing sales in the country as a whole but the company is expected to outperform rivals in this segment.

The company said full price sales of non-food items rose 5.3 per cent during the quarter compared with 0.4 per cent in the second quarter. Clearance sales were 35 per cent lower than last year and this had been a strategy evolved at the instance of chief executive Stuart Rose to boost profit margins.

The retailer said it had made progress across all areas of the business through better buying, better values and tight control of inventory, with around 35 per cent less stock going into the post-Christmas clearance than last year.

Rose said the market would remain tough in the days to come. Costs of fuel, utilities, rent and rates have risen sharply and this will have an impact next year, he said.

Rose, who joined the company in May 2004 with a brief to defend it from the planned acquisition by billionaire Philip Green, is not relying on sales growth by volumes. His aim is profitability.

The company is now engaged in a process of redesigning fashions, modernizing stores and advertising more on television so that it would reverse its two years of declining sales.

Marks & Spencer's shares closed at 502 pence Monday. The stock had touched the 510 pence mark on 9 December 29, its highest close since July 1998, after gaining 40 per cent in the last six months.