M&S sales slow as retail outlook darkens

Revenue growth at Marks & Spencer's UK operations has slowed to 0.5% while the latest report from the British Retail Consortium points to worryingly weak retail sales in the run-up to Christmas.

M&S: Christmas 2011 campaign starring The X Factor finalists
M&S: Christmas 2011 campaign starring The X Factor finalists

The figures from M&S reveal the retailer's growth fell from 2.7% in the second quarter of the year to 0.5% in the third quarter.

On a like-for-like basis revenues were down 0.7% in the third quarter.

The wider retail picture at the start of the fourth quarter is worsening, according to the BRC. Its October Retail Sales Monitor report showed like-for-like revenues were down 0.6% from October 2010.

Stephen Robertson, BRC director-general, said the basic weakness of consumer confidence and demand was "worrying this close to Christmas".

Closer examination of M&S' results reveals food grew at 2.8% in the third quarter but the rest of its business fell 1.9%. International revenues were up by 10.1%.

Pre-tax profits for the 26 weeks to 1 October dropped 8.1% year on year from £348.6m to £320.5m, despite revenue growth of 2.3% to £4.7bn.

M&S has revamped its general merchandise offering, relaunching all its clothing sub-brands and introducing furniture from designer Terence Conran.

It claims it has maintained its market share of clothing and food according to data from Kantar Worldpanel.

Marc Bolland, M&S chief executive, said: "In an increasingly promotional environment, we managed costs tightly and took a decision to invest in giving our customers better value, choosing not to pass on the full extent of the increases in commodity prices.

"We have a very exciting Christmas product offer for our customers with more innovation and choice than ever before."

The retailer launched its festive ad campaign on Sunday, featuring 'The X Factor finalists.

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