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* Clothing and home sales down 25.1% in its third quarter
* Food sales in the quarter rise 2.2%
* M&S says near term trading "very challenging"
* Says progress with turnaround masked by COVID-19 effects
* Shares down 2.3%, down 29% on year
(Adds detail, CEO comments, shares)
By James Davey
LONDON, Jan 8 (Reuters) - Marks & Spencer (M&S) saw
another big fall in sales of clothing and homeware in the
Christmas quarter as COVID-19 restrictions hit demand and closed
space, factors it said were masking progress made on its
turnaround plan.
M&S Chief Executive Steve Rowe said that the latest national
lockdowns across Britain announced this month, which could
potentially extend until Easter, meant clothing and home sales
would likely deteriorate further.
"Near term trading remains very challenging but we are
continuing to accelerate change under our Never the Same Again
programme to ensure the business emerges from the pandemic in
very different shape," Rowe told reporters.
He said the Christmas performance was "robust...in near
impossible conditions" and M&S had made "good progress" in
repositioning clothing and home ranges and buying.
However, this was hidden by the effects of COVID-19
restrictions and demand distortions, Rowe added.
M&S, one of the best known names in British retail, said
revenue in its clothing and home division slumped 25.1% in the
13 weeks to Dec. 26, its fiscal third quarter, having fallen
21.3% in the previous quarter.
Food sales did, however, rise 2.2%, building on a 1.6%
second quarter increase at M&S, which was struggling to reinvent
itself after decades of failed attempts before the pandemic.
SHARES SLIP
M&S said in May that the crisis would indelibly change its
business and it would speed-up its latest turnaround plan,
delivering three years of change in one.
In August, it cut 7,000 jobs and in November it reported a
first loss in its 94 years as a publicly listed company.
M&S shares were down 2.3% at 1055 GMT, extending
year-on-year losses to 29% after the results, which showed a
fall of 46.5% in clothing and home store sales was partly offset
by online growth of 47.5%.
Rowe said food had performed particularly well in the
four-week period leading up to Christmas, with like-for-like
sales, excluding hospitality and franchise up 8.7%, with large
retail park and Simply Food stores significantly outperforming.
He said M&S's joint venture with Ocado had also
performed well.
M&S's said its international revenue fell 10.4% due to
changing restrictions related to the pandemic and warned that
potential post-Brexit tariffs on goods exported to the European
Union, together with complex administrative processes, would
significantly impact its businesses in Ireland, the Czech
Republic and its franchise business in France.
It said it is working to mitigate the issues.
(Reporting by James Davey; Editing by Kate Holton, Jane
Merriman, Edmund Blair and Alexander Smith)
