Marks & Spencer food sales outperform market
Like-for-like food sales up +0.3%, with the company on track to open around 90 Simply Food stores this year
7 July 2015
Marks And Spencer’s latest trading report for Q1 2015/16, shows the retailer’s food sales are up +0.3% on a like-for-like (LFL) basis.
By contrast general merchandise sales dipped by -0.4% on a like-for-like basis. However, according to the retailer, its general merchandise sales are still on track to deliver the full year guidance of +150 to +200 basis points (BPS).
‘Another excellent quarter’ for food
In its trading statement, M&S said its food business delivered “another excellent quarter, outperforming the market”. The company launched 700 new food lines including the new Taste of the British Isles range. M&S has also said it will open around 90 Simply Food stores this year, and continues to see a good performance from stores opened to date.
Meanwhile, the group described general merchandise sales as broadly level on the year. The company says it continues to focus on improving product quality and style, and remains on track to deliver the improvement in gross margin previously guided.
M&S.com reported sales as being very strong, albeit against a soft post-launch comparative, with customers appreciating the improvements made in both its new website and distribution centre.
International business showed modest growth on a constant currency basis, notwithstanding the ongoing challenging macro-economic environment, with key priority markets such as India and Hong Kong performing well.
‘Managed to keep hold of the ball’
Ken Odeluga, a senior market analyst at www.cityindex.co.uk, described the food department’s performance as “little short of remarkable”.
“In food, again, the market ought not overlook the incremental, but consistent growth (+0.3% LFL this time) which is little short of remarkable in the current sectoral conditions,” he said.
“Online also came in on target in the region of 38-percentage points of growth. Once again however, I suspect some investors may have hoped that a more aggressive approach might have beaten guidance.”
Odeluga pointed out “an overall positive” is that the group’s financial year guidance isn’t changing. “Overall, M&S has managed to keep hold of the ball as it enters the second quarter,” he added.