Marks and Spencer blames new website for quarterly sales fall

Posted at 07/08/2014 4:58 PM | Updated as of 07/08/2014 4:58 PM

LONDON - British retailer Marks & Spencer reported its 12th straight quarterly fall in its clothing, footwear and homeware division on Tuesday, hurt by the transition to a new website.

Britain's biggest clothing retailer, which also sells food, said sales at its general merchandise division at stores open for more than a year fell 1.5 percent in the 13 weeks to June 28, its financial first quarter.

That compares with analysts' forecasts in a range of between 1 percent and 2 percent down and a decline of 0.6 percent in the fourth quarter of M&S's 2013/14 financial year.

"We have seen a continued improvement in clothing, although, as anticipated, the settling in of the new M&S.com site has had an impact on sales," Chief Executive Marc Bolland said.

The new website is a pillar of the intended transformation of the 130-year-old business into an international retailer reaching customers through stores, the web, tablets and mobile devices.

However, there have been reports of problems with re-registration and navigation on the new platform. The company said that M&S.com sales fell 8.1 percent in the first quarter.

Bolland has spent 2.3 billion pounds ($3.9 billion) over the past three years in a push to address decades of underinvestment, overseeing the redesign of products and stores and an overhaul of logistics to serve the new website.

However, a new clothing team he set up in 2012 has failed to deliver a sustained increase in sales and, for the first time, M&S earned less in the year to the end of March than its faster-growing rival Next.

M&S said that sales from its womenswear division were up as a result of stronger full-price sales, but overall its clothing like-for-like sales fell 0.6 percent, against a 0.6 percent rise in the fourth quarter.

M&S's food business, which contributes more than half of group sales but less profit, is performing much better and delivered a 19th consecutive quarter of growth.

Its sales on the same basis rose 1.7 percent, against analysts' forecasts of up 1.5-2.5 percent and a fourth-quarter rise of 0.1 percent.

The company said its full-year guidance remains unchanged.