Marks & Spencer Clothes Sales Drop Again as Gains Elude Bolland

LONDON, United Kingdom — Marks & Spencer Group Plc, the U.K.'s largest clothing retailer, reported a 12th straight quarterly drop in non-food sales as Chief Executive Officer Marc Bolland struggles to turn around the company's fortunes.

Same-store sales of general merchandise, a division that mostly comprises apparel, fell 1.5 percent in the 13 weeks ended June 28, the London-based retailer said today in a statement. That compares with the median estimate of 17 analysts surveyed by Bloomberg News for a 1 percent decline. Revenue at the food unit advanced 1.7 percent on the same basis.

Growth in clothing sales remains elusive for Bolland, who has introduced two collections under a new design team headed by former Jaeger CEO Belinda Earl, and invested 2.3 billion pounds in revamped stores and a new online infrastructure. The CEO flagged in May that the new website will take as long as six months to settle in, weighing on sales.

“We have seen a continued improvement in clothing, although as anticipated the settling in of the new M&S.com site has had an impact on sales,” Bolland, who will face investors at today’s annual shareholder meeting, said in the statement.

Online sales have been slowed by customers needing to re- register for the new website and having to learn to navigate their way around it, according to Deutsche Bank AG analyst Charlie Muir-Sands.

Same-store sales of clothing fell 0.6 percent, the company said, reversing the previous quarter’s 0.6 percent growth.

Marks & Spencer was the only major clothing retailer to lose U.K. sales and market share in the six months through mid- May, Sanford C. Bernstein analysts said June 20, citing data that’s not publicly available from researcher Kantar Worldpanel.

Sales declined 0.7 percent in the period, after being unchanged in the previous six months, the data showed. M&S frocks are on average 22 percent more expensive than those of competitors such as Inditex SA's Zara, online retailer Asos and Next Plc, Bernstein cited the data as showing.

General-merchandise’s underperformance has continued “for far longer than the more optimistic investors would wish for,” Barclays Plc analyst Chris Chaviaras said in a note.

Marks & Spencer shares are little changed this year, underperforming Next’s 23 percent gain.

By Gabi Thesing; Editors: Celeste Perri, Paul Jarvis, Robert Valpuesta