Marks & Spencer (LSE: MKS) 3Q19 Update: A Weak Quarter for Food and Clothing Alike
- Marks & Spencer (M&S) reported another weak quarter, with comparable sales down 2.4% in Clothing and Home and down 2.1% in Food.
- Management attributed the declines in Clothing and Home partly to lower footfall. Planned reductions in inventory levels resulted in a 25% reduction in the volume of stock going into the December sale.
- Management attributed the decline in Food to price investment and a transition to from promotions to lower prices. Nevertheless, comp growth in Food was still ahead of analyst expectations.
On the management call, CEO Steve Rowe noted that the third quarter was “challenging.” He said that “market conditions were tough, particularly in November when footfall and online visits both dropped significantly,” he said. Rowe said the sales growth was in line with the company’s expectations and was “steady” in the first half. The company reduced inventory volumes, resulting in 25% less stock going into the December sale. Rowe pointed to an increase in sales of entry-level clothing products, saying “customers are looking for value, and we’re providing that.” The company lowered prices on 227 food products and stripped out “complex and confusing” promotions.
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