M&S reported the largest decline in clothing sales in 8 years
Britain’s retailer Marks & Spencer Group reported the biggest drop in clothing sales in eight years after the new CEO Steve Rowe changed the pricing policy of the company at a time when consumer confidence is weakening, writes Bloomberg.
CEO Steve Rowe faces big challenges
Sales in stores that were open for at least a year fell by 8.9 percent in the 13 weeks which ended on July 2, said the London-based company. The result was worse than the expected by analysts 5 percent drop. About 5 percentage points of this decline is due to the shrinking number of promotional offers and deposition of sales, said Rowe.
He commented that these are not the data he wanted to see, but they are, however, what he expected.
The decline in sales is a new signal for the challenges that Rowe is facing as he tries to stabilize the shrinking share of the cost of the clothing retailer. At the same time, he must decide the future of the troubled international division as well based on the shops in the UK. Rowe succeeded Mark Boland in April and took on the task to cope with the decline in sales of clothes.
The price of shares in Marks & Spencer shrank by 2.6 percent to 286.5 pence at 8:29 pm local times in London, increasing its decline this year to 37%.
“Just when you thought things couldn’t get worse for M&S, they did,” said the director of the consultant Retail Vision John Ibbotson. “Despite his best intentions, Rowe has not been able to stop the rot.”
According to Rowe’s words, consumer confidence has reported a fall immediately after the Brexit vote and “remains fragile”.
The CEO said he was encouraged by the reaction of customers to the change in pricing, while he himself is trying to help the company to compete more effectively with the low-cost proposals of Primark for an example.
This year M & S reduces the number of sales from nine to six, and next year will reduce them to four During the quarter the company has shrunk permanently the prices of around 1000 products, as the average reduction is about 3 percent, he said.
The subdivision for foodstuff, however, has a 4% jump in sales during the reported period, although revenues of stores that were open for at least a year dropped by 0.9 percent.
M&S retains its annual forecasts.