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Retailers fearful after M&S dip

09/01/2008

Shares on the high street fell on Wednesday after Marks and Spencer (M&S) announced its worst quarterly results for two years.

At close of trading M&S shares were 18.72 per cent down, with the falls mirrored at Debenhams (11.15 per cent), H&M (7.48 per cent), Next (5.4 per cent) and J Sainsbury (5.07 per cent).

The figures have added to worries that lower UK consumer spending may indicate a larger slowdown in the economy as a whole.

On Monday, the British Retail Consortium said that UK retailers had experienced their toughest Christmas performance in three years, with overall sales growing by just 0.3 per cent compared to last year.
Earlier today M&S announced that the lead-up to Christmas was "more challenging" than expected.

Sir Stuart Rose, the retailer's chief executive, reported a fall in sales over the key Christmas trading period when M&S would have been hoping to make much of its yearly revenue.

Like-for-like sales for M&S fell 2.2 per cent in the UK in the 13 weeks up to the end of December, while general merchandise dropped 3.2 per cent and food sales were 1.5 per cent down.

Sir Stuart said British businesses were experiencing a "real crunch" with costs, such as energy prices, rising, but weaker consumer spending meaning they were not able to increase prices.

The announcement also noted that market conditions would remain tough through 2008 but the M&S chief remained optimistic.

"We are well positioned with a strong product offer and better-than-ever values across our business," Sir Stuart said.

"We now have 70 per cent of our stores in the modernised format and a strong pipeline of new space for 2008 and beyond."