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Marks & Spencer Clothes Sales Drop as Gains Elude Bolland

Marks&spencer

Marks & Spencer Group Plc, the U.K.’s largest clothing retailer, said apparel sales resumed their decline in the first quarter as customers took time to adapt to the company’s redesigned website.

Same-store sales of clothing fell 0.6 percent, the London-based retailer said today in a statement, reversing the previous quarter’s 0.6 percent growth. Online sales slid 8.1 percent.

Marks & Spencer has said that February’s introduction of a redesigned website will weigh on sales for six months as customers re-register for accounts and learn to navigate their way around it. The drop in online revenue is the latest setback for Chief Executive Officer Marc Bolland, who has presided over 12 consecutive declines in non-food sales.

“The market will struggle with the dotcom figures,” Clive Black, an analyst at Shore Capital, said by e-mail.

Same-store sales of general merchandise, a division that mostly comprises apparel, fell 1.5 percent in the 13 weeks ended June 28, M&S said today. That compares with the median estimate of 17 analysts surveyed by Bloomberg News for a 1 percent drop.

Helping offset the decline in online sales, women’s wear returned to growth in the quarter, the company said. Same-store sales in the key category were up “slightly,” Chief Financial Officer Alan Stewart said on a conference call.

The retailer said it’s “on track” to meet its profit margin objectives for the year, while its overall financial guidance for the year is unchanged.

Expensive Frocks

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 ($3.9 billion) in revamped stores and the new online infrastructure.

“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.

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 (ITX)’s Zara, online retailer Asos and Next Plc (NXT), 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.

(Source: Bloomberg)