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Online sales show strong growth at M&S

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Marks & Spencer today reported strong growth in online sales following customer service improvements including a new digital outlet store.

But while ecommerce sales rose by 22.8% in the 13 weeks to March 31, sales in the high street retailer’s core UK market fell by 0.7%, like-for-like. Total UK sales rose by 1.2% and group sales by 0.8%. International sales were down by 2.0%.

Chief executive Marc Bolland said: “Marks & Spencer continued to make progress in a challenging market. Group sales grew by 0.8%, and UK sales grew by 1.2%. Our food business has again performed well, especially in healthy food, whilst the general merchandise performance was more mixed.

“Direct had another strong quarter with sales up 22.8% through a number of new initiatives delivering an improved customer shopping experience.”

Bolland said the retailer was still on course to deliver on its long-term visions despite falling sales in the short term.

“We have continued to manage costs tightly, and are confident of delivering full year profits in line with expectations,” he said. “While the short term trading outlook continues to be challenging, we are focused on investing in line with our plan and are making strong progress against our goal of becoming an international, multi-channel retailer.”

Falling international sales, he said, were the result of “macro-economic pressure and restructuring in some parts of Europe.” M&S said sales were strong in India, China, the Gulf and its new French flagship store, but weak in Ireland, Greece and in Central Europe, the latter as a result of restructuring.

He said improvements to stores, piloted in the UK, would be rolled out across the rest of the M&S estate by the middle of next year. At home, food sales rose by 1%, like-for-like and 3.1% in total, but general merchandising fell by 2.8%, like-for-like and 1.2% in total.

Our view: When the vision is of becoming an international multichannel retailer, what happens when overseas sales fall? M&S says this is a short-term effect of the economic situation, but it may be required to hold its nerve if the trend continues. Meanwhile, the rise in ecommerce sales has good implications for the multichannel part of the strategy, which may well translate effectively to international markets. We’ll be interested to see how the online international sales (the retailer now has dedicated websites for France and Ireland) are working out when M&S reports its full-year results on May 22.

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