M&S Loses Sparkle With Share Drop

Leading retailer Marks & Spencer has reported a slide by more than 20% in shares.

M&S revealed a sudden 5.3% fall in UK like-for-like sales prompting a 21% fall in the retailer's share price. By 8.30am on Wednesday, M&S shares were priced at 250 pence and shares in other retailers, such as Sainsbury's and Next, have also fallen sharply.

Chairman Stuart Rose, has also announced the departure of a senior manager and his replacement by John Dixon, currently Director of Home and M&S Direct, who is the new Director of Food.

The figures which cover the first quarter of the trading year to June 28 also reavel a 6.2% fall on a like-for-like basis while food sales were down by 4.5%.

The surprise announcement which came a week earlier than expected by the market has unveiled a more vulnerable group in a worsening retail climate.

Sir Rose said in a statement: "General Merchandise has been affected by the current market conditions, but we are holding market share in Clothing, and Home continues to outperform. Stock levels have been well controlled and our summer sale will start at the same time as last year.

"In order to meet these challenging market conditions, we need to increase the pace of change on a number of operating and trading initiatives.

"As a result, Steven Esom, Director of Food, is stepping down from the Board and will be leaving the business with immediate effect.

"John Dixon, currently Director of Home and M&S Direct, has been appointed Director of Food. John will remain a member of the Executive Committee and will continue to report to me."

Rose added that he expected "market conditions to remain difficult" and the business would be managed accordingly.

"Four years ago, M&S was a weak business in a strong market. Today, we are a strong business in a weak market.

"Our work to reposition the business in terms of product and values, service and store environment, coupled with our strong balance sheet and cash flows, places us well for the short term while enabling us to continue to invest for the future," he concluded.

On a more optimistic note, website sales increased by a healthy 70% and international sales performed well with sales up 24.5% over the period.

However, Seymour Pierce analyst Freddie George said it was "inevitable" there would be worries about the firm's position.

He said that concerns would grow over the "strategy on food", the "refurbishment programme" and the groups "high level of debt".

M&S will report its 2008/09 interim results and Q2 trading for the 13 weeks to 27 September 2008 on 4 November.

(DS)