MARKS and Spencer shares were down 11 per cent after the retailer posted a mixed collection of Christmas quarter results.
The high street bellwether said its food division had a stand-out performance over the festivities that helped lift an otherwise lacklustre 13 weeks to December 28.
The company said higher food waste and weak sales of menswear – after the over-purchase of skinny jeans - and gifts took the shine off the results, hammering the retailer’s shares at the latest stage of its clothing turnaround attempt.
UK food revenue grew 1.5% to £1.7 billion over the quarter, the company told the London Stock Exchange.
READ MORE: M&S takes 17% profit hit but food sales rise
Its clothes stores fared less well, with sales in the clothing and home division dropping 2.7% to £1.1 billion in the third quarter.
On a like-for-like basis, which strips out the effect of new stores and closures, UK revenue grew 0.2%.
Steve Rowe, M&S chief executive, said that “disappointing one-off issues” such as waste in the food business and the performance of its gifts range “held us back from delivering a stronger result”.
He said: “The food business continued to outperform the market, and clothing and home had a strong start to the quarter, albeit this was followed by a challenging trading environment in the lead-up to Christmas.
“As we drive a faster pace of change, disappointing one-off issues - notably waste and supply chain in the food business, the shape of buy in menswear and performance in our gifting categories - held us back from delivering a stronger result.
“However, the changes we made earlier in the year in clothing have arrested the worst of the issues of the first six months and we are progressively building a much stronger team for the future.”
READ MORE: New M&S stores to open in Scotland
As well as buying too many skinny and slim-fit jeans it also didn’t buy enough medium and large sizes.
The company said gift performance was hit by “unprecedented discounting” in the UK clothing market between Black Friday and Christmas.
Mr Rowe added during a call with reporters although customers purchased a lot of M&S food, “we bought more than we sold”, but he promised that no food waste went to landfill.
The business stuck to its guidance, but warned that gross margins are likely to be at the lower end of expectations, “largely offset by cost reduction programme”.
Online clothing and home revenue in the UK was up 1.5% but this was lower than expected.
The business said it had to deal with competitors offering discounts to customers, and less furniture being dispatched.
The retailer, which employs, 7,000 in 100 stores in Scotland, improved its search and rationalisation functions and launched an option for customers to pay in instalments.
International sales fell 2.3% to £251 million, the company said.
READ MORE: M&S appoints former Tesco chief in stopgap finance role
Arlene Ewing, investment manager at Brewin Dolphin, said: “A slight increase in UK like-for-like sales at Marks and Spencer suggests there is tentative progress in its turnaround plans. It is especially positive in the current UK retail environment.
“Unsurprisingly, the food business remains the main driver of growth and the tie-up with Ocado should support its potential for further expansion in the future. While today’s results are relatively welcome, there is still a lot of work required to transform the overall business – particularly its struggling divisions.”
Richard Lim, chief executive of consultancy Retail Economics, said: “Food performed particularly well, benefitting from stronger underlying household finances, but consumers also responded positively to more competitive pricing.
“It appeared that shoppers were prepared to indulge that little bit more this Christmas on food if they spotted value for money.”
He added: “While clothing and home lagged overall growth, it still improved on previous performances. The major disappointment came in the online business that barely showed any meaningful signs of growth.
“Integrating a seamless digital proposition remains the key challenge for the retailer.”
M&S shares sank to 194p, down 11%, or 24.2p.
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