Marks & Spencer Edges Toward Revival as Clothes Sales Drop Eases

LONDON, United Kingdom — Marks & Spencer Group Plc reported the smallest decline in general-merchandise sales in more than two years, signaling that a new women's clothing collection may be helping the U.K.'s largest clothing retailer regain shoppers.

Sales at stores open at least a year fell 1.3 percent in the quarter ended Sept. 28, the London-based company said in a statement today. M&S also said underlying pretax profit fell 8.9 percent to 261.6 million pounds ($418 million), compared with the 273 million-pound average estimate of 16 analysts in a Bloomberg News survey.

M&S is counting on new designs such as 199-pound body-hugging leather dresses to reverse nine consecutive quarters of same-store sale declines as shoppers defect to Inditex SA's Zara and discount chain Primark. The company's share of women's wear fell 0.2 percent in 24 through September, compared with a 0.5 percent drop for the previous period, the Financial Times reported Oct. 30, citing Kantar Worldpanel figures.

“Although only in store for three weeks of the half-year, our autumn/winter collection has been well received by customers, and we have seen some early signs of improvement,” Chief Executive Officer Marc Bolland said in the statement.

The retailer backed the latest collection with an ad campaign featuring "Britain's Leading Ladies." A subsequent campaign was led by Academy Award-winning actress Helen Mirren and Grace Coddington, the creative director of American Vogue.

The new fashion range is “an evolution rather than a revolution,” according to Sanford C. Bernstein analyst Jamie Merriman, who cut the stock to underperform on Oct. 8. “While M&S’s core customers, women aged 50 to 70, like the product, they are price sensitive and did not see enough change in the product to cause them to increase spend.”

“Given continued pressure on disposable incomes, we remain cautious about the outlook for the remainder of the year,” the company said in today’s statement.

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