Marks & Spencer Q1 Sales Up, UK Sales Weak, Stock Down

Chief executive, Steve Rowe, stated that the company had anticipated a reduction in sales following the adoption of this new strategy for its clothing and home division in May.

The group’s food arm fared better, with like-for-like sales down by 0.9% in the 13 weeks to July 2, of which 0.5% was due to Easter timing – while total comparable United Kingdom store sales were 4.3% lower overall.

The retail giant posted an 8.9% plunge in first quarter like-for-like sales in its clothing and homewares division, as it cut back on promotions amid a “weak market”. M&S said the impact of moving its summer sale and running fewer promotions than previous year accounted for 5% of the like-for-like fall.

“We knew our actions would reduce total sales, but we are seeing some encouraging early signs”, he said.

Like-for-like food sales were also down 0.9% in the 13 weeks to July 2016, 0.5% of which was due to Easter timing, the retailer said.

New CEO Steve Rowe, who was promoted to replace Bolland in January, tries to put a fearless face on the first quarter numbers, saying they’re as a result of reducing promotional activity, which is part of the turnaround plan. Credit Suisse Group AG reaffirmed an “underperform” rating and issued a GBX 340 ($4.52) target price on shares of Marks and Spencer Group Plc in a report on Friday, June 24th.

Steve Rowe’s first three months, they said, showed his reign was disappointing, wrong-headed and destined for failure.

When Rowe took charge he said turning around clothing and home by improving the customer offer was his number one priority.

For the full year, M&S maintained its guidance for a clothing and home gross margin improvement of 50-100 basis points and like-for-like sales broadly consistent with last year. The Firm is the holding firm of the Marks & Spencer Group of companies.

The British firm says that consumer confidence softened in the lead-up to the UK’s European Union membership referendum on June 23rd.

The CEO said he’s been encouraged by the response of customers to changes in the retailer’s pricing as he seeks to compete better with the likes of Primark, which also reported results Thursday and has expanded outside the U.K.in recent years.