Marks & Spencer Hit by High Street Price War
A bastion of the U.K. high street, Marks & Spencer, reported a drop in non-food sales in the first three months of the year, numbers which are likely to inflame shareholder concerns over the company's management and retail strategy.
Trade figures for the quarter, showed a decline of 3.8 percent for general merchandise, which includes clothing, footwear and homeware, but excludes food.
Analysts had forecast a decline of 4 to 6 percent, according to a company poll, after a 3.8 percent fall in the previous quarter when M&S moved to protect profit margins by offering fewer discounts. It was the seventh consecutive quarterly fall in general merchandise sales.
The retailer however posted a 4 percent rise in food sales from a year ago, better than a range of forecasts of 1.9 to 3.5 percent.
The company said it was "cautious" over the outlook for the year ahead and said in general merchandising it faced "difficult trading conditions."
Marks & Spencer shares rose 4 percent in morning trade on Thursday.
The figures come amid reports that the company's biggest shareholders were stepping up pressure on chief executive Marc Bolland over declining sales, the Financial Times reported on Wednesday. Shares of Marks & Spencer have risen 5.61 percent over the last 12 months, compared to competitor and clothes retailer Next, whose shares have risen 45.48 percent.
One trader defended the company's sales figures, however. "These set of numbers were above expectations," Manoj Ladwa, head of Trading at TJM Partners told CNBC Europe's "Squawk Box."
"It's doing great on the food retail side - it's not so great on the retail side but Marks & Spencer has been trading around these levels in a sideways range for a long period of time now. Its a defensive stock," he said on Thursday.
Anthony Fry, senior adviser at Espirito Santo Investment Bank U.K., told CNBC that Marks & Spencer's woes reflected the national and regional decline of high street retailers more than management strategy.
"I don't know if Marc Bolland has lost his touch, it's very tough out there. There's no point in putting rose-tinted spectacles over this…If you go across the totality of U.K. retail, there are in every single segment winners and losers. It's really tough if you're trying to do both retail and food."
-Reuters contributed reporting to this story.