M&S sales add to woes

July 11, 2001 Posted: 1300 GMT

LONDON (CNN) -- Marks & Spencer, the troubled UK retailer, dished out more disappointing trading figures on Wednesday as sales dropped again.

Clothing, footwear and gifts sales in the 14 weeks to July 7 fell more than 9 percent overall, and were down 3.4 percent for stores open more than a year, the company said.

But despite the company's continuing problems, its share price rose by 2.8 percent to 255 pence in London trading, amid signs M&S was improving its profitability.

The company said in a statement margins on bought-in items had risen by 3 percent through more cost-effective buying.

Analyst Tony Shiret of Credit Suisse First Boston told Reuters: "The programme of cost savings is helping preserve the bottom line."

The company's popular food retailing also helped to offset the downside on clothing. It said that sales of food rose 4.8 percent, although the figures were way behind rivals such as supermarket chain Tesco (TSCO).

Industry figures have also shown M&S has been the biggest loser of market share in the sector over the last six months.

M&S, the former icon of UK retailing, has faced fierce criticism and protests as it closed loss-making continental Europe operations, cutting 3,350 jobs.

It also plans to sell U.S. businesses Brooks Brothers and Kings Super Markets, as it concentrates on reviving its fortunes.

The UK retailer has failed to capture the imagination of customers and has admitted it has "neglected" its core female clients, which M&S describes as "classically styled."

Competition is fierce in the UK retail sector but consumer spending has held up despite a global economic slowdown.

Chief Executive Luc Vandevelde, who joined the company about 17 months ago, said in March it would take 12 to 18 months to turn around the retailer.

He was expected to face criticism later Wednesday when 2,500 shareholders gather and he seeks their backing to double the cash company executives can earn through share options.

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