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Food Sales Drop for M&S

Store expanison plans put on hold

Marks and Spencer is expected to open less Simply Food shops than predicted after same store food sales tumbled in the first six months of its financial year.

Last year, its chief executive, Steve Rowe, stated that the retailer would open 200 Simply Food shops over the next five years.

Though, M&S has now said it would "reposition our food business including slowing our Simply Food store opening plan”.

The company’s like-for-like food dales, which doesn’t include new store trade, dropped approximately 0.1% with Marks stating that it faced “stronger headwinds”.

However, total food sales for the period heightened by 4.4%. Reports have stated that this rise was due to new shop openings.

M&S said that "hard-pressed" consumers were more aware of value and were being "careful about premium choices". It added that "headwinds facing our food business have intensified as competitors have encroached on some of our space with the rapid growth of convenience”.

Additionally, it stated that food margins had taken a hit because of increasing producer costs. This is as well as its policy of not passing on price increases to its customers.

The company planned for as many as 90 new Simply Food shops this year, of which half would be operated by M&S itself, and the other half by franchises. Instead, it will now open 80 stores, split equally between M&S and its franchise supporters. It also planned to open an additional 90 Simply Food stores next year, though according to reports the figure is set to be reduced.

Shares in M&S dropped by 1.8% to 321.9p.

Commenting on M&S's performance in food, Patrick O'Brien, UK research director at GlobalData Retail, said: "When you compare that to the likes of Tesco, Sainsbury's and Morrisons, whose recent like-for-likes have been around 2% plus, that's a pretty bad performance.”

In his statement, he also said that food has been a “banker” for the company in recent years. "For it to be losing ground at a time of inflation is really quite damaging," he said.

Overall sales for the group rose by 2.6% to £5.1bn, though pre-tax profits tumbled by 5.3% to £219.1m.

Meanwhile, like-for-like sales in homeware and clothing dropped 0.7%, while total same-store sales declined by 0.3%.

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