Marks & Spencer’s sales were down 8.4 per cent to £2.8 billion as the late 2020 lockdown and tiering restrictions took their toll in the pre-Christmas period.
The clothing and home business segment was particularly affected, down 25.1 per ent, reflecting an in-store sales decline of 46.5 per cent, partly offset by online sales growth of 47.5 per cent.
The sales mix remained heavily biased to pandemic-influenced product such as sleepwear and leisurewear.
Shares in the high street chain, established in Leeds but now headquartered in London, fell 2.1 per cent following the stock exchange announcement.
Chief executive Steve Rowe commented: “Given the on-off restrictions and distortions in demand patterns our trading was robust over the Christmas period.
“More importantly, beneath the Covid clouds we saw a very strong performance from the food business, including Ocado Retail, and a further acceleration of clothing and home online.
“Near term trading remains very challenging but we are continuing to accelerate change under our Never the Same Again programme to ensure the business emerges from the pandemic in very different shape,” he added.
The company said the online business performed well, with fulfilment from both Castle Donington and ship from store system BOSS helping to increase volume and release the pressure on store stock.
Food like-for-like sales increased 2.6 per cent. On a comparative basis, this performance was even stronger given reduced food-on-the-move sales and lower footfall in town and city centres.
During the four-week lead up to Christmas, like-for-like sales ex-hospitality and franchise grew by 8.7 per cent, with large retail park and Simply Food stores outperforming.
Ocado Retail sustained its recent positive performance with the participation of M&S products remaining strong.
International revenue decreased 10.4 per cent, impacted by changing restrictions across the globe. The trading update noted that near-term franchise performance continues to be impacted by the changes in partner stock requirements as a result of the pandemic.
During the period, M&S issued a £300 million bond, maturing in 2026, and repurchased £136 million of bonds expiring in December 2021, in order to strengthen the group’s debt and liquidity profile.
“The free trade agreement with the EU means we will not incur tariffs on our core UK sales,” read the update. “However potential tariffs on part of our range exported to the EU, together with very complex administrative processes, will significantly impact our businesses in Ireland, the Czech Republic and our franchise business in France which we are actively working to mitigate.”
Commenting on the results, Third Bridge retail sector analyst Ross Hindle said that the mooted acquisition of Jaeger hints at the potential for a more aggressive shift into the multi-brand space.
“M&S has numerous large stores which could be filled with non-M&S merchandise in order to drive their top-line – although the risk here is whether such brands might cannibalise M&S branded products,” Mr Hindle said.
“Part of M&S’s recovery is dependent on an effective vaccine rollout and a return to the business-as-usual some say may come from Autumn onwards.
“However long-term success will be dependent on the company fixing the structural problems it faces around a bloated product range, high stock keeping unit count, and high street store portfolio.”