8th Jul 2014 06:59
LONDON (Alliance News) - British retailer Marks and Spencer Group PLC Tuesday reported a hefty drop in online sales for the first quarter of its financial year, which the retailer blamed on the transition to its new website platform and a cutback of promotions both online and in store.
Ahead of its annual general meeting later Tuesday, M&S reported an 8.1% fall in sales of its online business, M&S.com, for the 13 weeks to June 28.
In May, M&S warned that the rebuild of online customers, following the transition to its new website platform back in February, would take up to six months to "settle in", meaning that growth should pick up in the second half of the year. M&S is hoping the new website platform will encourage sales growth in its general merchandise business.
M&S said Tuesday that it expects online sales to return to growth ahead of its "peak trading period", which M&S said is November and December.
Total sales across the group rose 2.3% in the quarter, while UK sales were up 2%, and on a like-for-like basis up 0.3%.
Over the last decade, the retailer has seen its food business boom, while its clothing and home furnishing ranges have struggled.
While M&S said it has seen an improving trend in clothing sales, with sales up in the quarter but still down on a like-for-like basis, the company's general merchandise business, which includes both clothes and its home offering, remains weak and in negative territory.
General merchandise sales were down 0.8% in the quarter, and down 1.5% on a like-for-like basis.
Prior to M&S's transition to a new online website, the company's online and international businesses have been driving the business, alongside food.
In the quarter, international sales were up 4.7%, which M&S said was supported by new international store openings.
The retailer recently came to the end of a three-year plan to turnaround the business and transform the company into an "international multi-channel retailer", having pumped money into a new company website, and expanding its store portfolio overseas. However, it has failed to turnaround its general merchandise business despite the success of its food offering.
Rival Next PLC overtook M&S in terms of underlying pretax profit for the first time last year, after M&S reported its third consecutive annual drop in a closely-watched profit measure, hit by heavy discounting in the UK and continued weakness in general merchandise and clothing sales.
The retailer said it remained cautious about the outlook for the business due to competition and promotional pricing in the UK retail sector, although it has seen some improvement in consumer confidence.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
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