Last checked at 
* Q3 UK like-for-like sales up 0.2%
* Food sales up 1.4%, clothing & home down 1.7%
* M&S calls out "disappointing one-off issues"
* Maintains full year guidance
* Shares down 9%
(Adds detail, CEO, analyst comment, updates shares)
By James Davey
LONDON, Jan 9 (Reuters) - Higher food waste and weak sales
of menswear and gifts tarnished Marks & Spencer's (M&S)
Christmas performance, hammering the British retailer's shares
and raising more questions about its latest turnaround attempt.
M&S said on Thursday that while sales volumes in
food increased, it also experienced higher waste levels.
Menswear sales suffered because it over-bought skinny and slim
styles in its contemporary ranges, under-bought more classic
fits, and also had too many small sizes and not enough medium
and large ones.
The group said its gifting performance was hit by
"unprecedented discounting" in the UK clothing market between
Black Friday and Christmas.
These "disappointing one-off issues", as M&S described them,
overshadowed the group reporting a rise in quarterly underlying
sales for its overall UK business for the first time since 2017.
Shares in the 136-year-old company, one of the best known
names in UK retail, were down 9% at 1049 GMT, extending losses
over the last year to 25%. Last September M&S lost its place in
the prestigious FTSE 100 index, symbolising its decline amid
competition from fast-fashion and online rivals.
After over a decade of false dawns, M&S set out on its
latest transformation plan shortly after retail veteran Archie
Norman became chairman in 2017 to work alongside CEO Steve Rowe,
who has been with the firm for 30 years and became boss in 2016.
The retailer has been closing weak stores, revamping ranges,
investing in technology, and last year struck a 1.5 billion
pound ($2 billion) deal with online grocer Ocado to
give it a home delivery service for food from this September.
M&S's overall UK like-for-like sales increased 0.2% in the
13 weeks to Dec. 28, its fiscal third quarter.
Like-for-like food sales rose 1.4%, ahead of analysts'
average forecast for a 1.1% increase. Clothing and home sales on
the same basis fell 1.7%, below the mean forecast for a 0.8%
decline, but much better than the previous quarter's 5.7% fall.
"As we drive a faster pace of change, disappointing one-off
issues - notably waste and supply chain in the food business,
the shape of buy in menswear and performance in our gifting
categories - held us back from delivering a stronger result,"
said Rowe.
DIRECT CONTROL
Last July, Rowe took direct control of the clothing
business, sacking the division's boss, Jill McDonald, after
publicly criticising chronic product availability.
"How many one-off issues can you have?," asked one former
M&S director. "Last year it was 'jeansgate', then availability
generally, now it's food waste," he added, referring in part to
shortage of stock in 2019 for a popular jeans range.
Last month M&S hired Richard Price, the CEO of Tesco's
F&F Clothing business, to lead its clothing division
but is yet to say when he will start.
Rowe said the firm had delivered an improved performance in
the quarter across both main businesses.
He said the food business had continued to outperform the
market, while clothing and home had a strong start to the
quarter, albeit this was followed by a challenging trading
environment in the lead up to Christmas. Underlying sales of
womenswear were positive in the quarter.
Separately on Thursday, industry data showed British
shoppers cut back on spending in late 2019, rounding off the
worst year since at least the mid-1990s.
M&S said its full-year financial expectations were
unchanged, although gross margins were expected to be around the
lower end of guidance, largely offset by cost reductions.
Prior to the update, analysts were on average forecasting a
fiscal 2019-20 pretax profit of 464 million pounds, which would
be a fourth straight year of decline. A decade ago, M&S made a
profit of 1 billion pounds.
"With limited evidence of major improvement in market share
trends, despite potential macro tailwinds ahead, we stay
agnostic on the fundamental recovery potential for the
business," said analysts at Jefferies.
($1 = 0.7630 pounds)
(Reporting by James Davey; Editing by Kate Holton and Mark
Potter)
