The company’s shares plummeted 19 per cent on Wednesday morning after like-for-like sales fell 2.2 per cent in the 13 weeks to December 29. General merchandise was down 3.2 per cent and food fell 1.5 per cent.
The retailer has spent£1.5 billion on store refurbishments over the past three years and had planned to invest another£1 billion in the business in the next financial year. However, finance director Ian Dyson said the timing of the spending was being revisited. “It’s under review. In different economic environments, we’ll look at our operating cost base and our cap ex,” he said.
Chief executive Sir Stuart Rose added that this wouldn’t mean a halt to spending, but said: “As prudent managers, we have to look at our housekeeping and ask: ‘can we afford to do this, this, this and this this year, or shall we put some things back to next year?’”
Rose was downbeat about the prospects for the year ahead, although he insisted M&S would still outperform the market. “The market has seriously softened and we’re in for a tough time in terms of the economy,” he said. “We are planning on having a tough time until spring 2009.”
He said there had been intense price deflation in non-food and that, in volume terms, like-for-like sales had grown and market share had been maintained. However, he warned: “Where we took£100 last year, we’ve taken£94 this year. You’ve got to run very hard to stand still.”
M&S was criticised by analysts for its lacklustre like-for-like food performance, which Rose attributed to new floor space affecting sales from existing stores.
“There is some cannibalisation. No, I’m not happy with it, but we’ve got some plans to mitigate that.” Total food sales were up 5.1 per cent.
Asked about his own future, Rose failed to commit himself beyond next year – when he will pass five years running the business – increasing speculation he will decide to call it a day in 2009. “I haven’t done four years yet. When I’ve got past four, it’s legitimate to ask me the question,” he said.
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