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LONDON (Alliance News) - Marks and Spencer Group has reported a hefty drop in online sales for the first quarter of its financial year, which the retailer blamed on the transition to its new website platform and a cutback in promotions.

The retailer said sales at M&S.com dropped 8.1% in the 13 weeks to June 28. Management struggled to give a clear reason for the extent of the decline, telling journalists that the "settling in" of the new website has held back "re-registration and conversion rates". It has previously predicted that the "settling in" would take up to six months, meaning growth should pick up in the second half of the financial year.

It said its was hit by fewer promotions on line and in its stores, although this also meant the company is on track to deliver its full-year gross margin guidance, according to Chief Executive Marc Bolland.

It wasn't all bad news. Total sales across the group rose 2.3% in the quarter, while UK sales were up 2%, or 0.3% on a like-for-like basis. The growth was again driven by food and international sales, while its general merchandise business was hit by lower home furnishings sales, which are mostly done online. Clothing sales were up just 0.1%, or down 0.6% on a like-for-like basis.

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MARKETS: Stock indices are lower across the UK and Europe, led by the airlines after Air France-KLM issued a profit warning just weeks after a similar warning from German flag-carrier Lufthansa. British Airways owner, International Consolidated Airlines, leads the FTSE 100 fallers, down 5.0%, with easyJet not far behind, down 3.4%.

The pound has taken a dip against other major currencies following disappointing UK industrial and manufacturing production data.

US stock futures are indicating that Wall Street will open marginally lower, with the DJIA and the S&P 500 both pointing about 0.1% lower.

FTSE 100: down 0.5% at 6,791.44
FTSE 250: down 1.0% at 15,732.15
AIM ALL-SHARE: down 0.5% at 784.46
GBP-USD: down at 1.7115
EUR-USD: down at 1.3591
GOLD: up at USD1,319.22 an ounce
OIL (Brent): down at USD109.51 a barrel
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Other Top UK Corporate News
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Shares in digital marketing company Matomy Media Group rose in early conditional dealings after its delayed initial public offering on the London main market, while North Sea oil and gas operator Nordic Energy PLC added itself to the AIM market IPO pipeline. Israel-based Matomy priced its IPO at 227 pence a share, giving it an initial market capitalisation of GBP203 million, but its shares had risen to 235 pence in early conditional dealings. Unconditional dealings are due to start July 11. Nordic Energy, meanwhile, said it intends to list on AIM in the second half of 2014, moving from the ISDX Growth Market. The oil and gas exploration and production company operates in Denmark and Norway and the North Sea sectors of the Netherlands and UK.
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Housebuilder Bovis Homes Group joined peers in reporting higher new house sales at higher average prices, confirming the continued strong recovery of the sector after several years in the doldrums in the wake of the financial crisis. In a trading update, Bovis said legal completions in the first half of 2014 were 1,487, up from 963 in the first half of 2013, at an average selling price of GBP210,000, up from GBP188.500. It said the rise in selling prices was down to it selling more expensive, larger properties, as well as "modest" improvements in house prices.
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UDG Healthcare said it has acquired specialist healthcare and scientific public relations business MFRHRC Holdings Ltd for up to GBP13 million. UDG has bought the company, which trades as Galliard and Nyxeon, for GBP6.5 million in cash, with a further GBP6.5 million payable based on profit targets over the next three years. The acquisition is expected to contribute to earnings immediately, UDG said.
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Dechra Pharmaceuticals said it remains well placed for future growth, as it saw revenue rise by around 1.6% at constant currencies in the year to end-June. In a trading update, the veterinary drug company said it had seen growth in all markets across the EU except for the Netherlands, driving its European pharmaceuticals division revenue up 0.7% compared with the previous year. In the Netherlands, the competition and concerns about the use of antimicrobial products in veterinary medicine continued to make the market challenging, Dechra said.
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Building products distributor SIG said it is expecting to report a strong rise in pretax profit in the first half of the year, as strong sales growth in the UK and Ireland helped offset a hit on revenue earned elsewhere due to the strength of sterling. The company warned that sales growth moderated in the last two months of the half, but kept its guidance for "good progress" for the year as a whole despite currency movements going against it. In a trading update, SIG said it expects to report underlying pretax profit of at least GBP40 million for the first six months of 2014, up from GBP33.6 million last year excluding the sale of its former German roofing and Miller Pattison businesses, as sales from continuing operations rose by about 6.5% to about GBP1.29 billion.
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Homeware retailer Dunelm Group said it expects to report higher pretax profit and revenue for the financial year just ended, boosted by particularly strong sales growth in the final quarter of the year as the UK economy continued improving. Dunelm said it expects to report a pretax profit of GBP116 million for the year ended June 28, driven by a "solid trading performance in the final quarter" and a 7.8% increase in sales for the year as a whole to GBP730.2 million. This compares with a pretax profit of GBP108.1 million a year earlier, and sales of GBP677.2 million.
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AIM MOVERS
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Dods Group is doing well after it reported a sharply narrowed loss, higher revenue, and said it would continue transforming the publishing and events operations to push up profitability. London Mining is up after Barclays upgraded the company to Equal Weight from Underweight, increasing its price target to 80 pence from 75p, saying that it believes the company's balance sheet stress and near-term pressure on iron ore prices are now in the past. Proteome Sciences has risen after it published a study, along with King's College, London, identifying proteins that could be used to predict the onset of Alzheimer's, a step towards developing a blood test for the disease. Clontarf Energy is another gainer after the company, alongside Petrel Resources, said legal proceedings related to their Tano 2A exploration licence in Ghana have been temporarily adjourned for the second time in the last two weeks. Shares in Urals Energy rose after the company said Adler Impex SA has significantly increased its shareholding after buying shares on July 3. At the other end of the market, shares in Monitise have slumped after it warned that its shift to a subscription model meant revenue in its last financial year had come in below expectations and its loss for the year will be wider than the market expected. Belgravium Technologies is also down as it reverses some of the strong gains posted Monday when it said it had been approached by Trakm8 Holdings.
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Top Economics And General
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UK industrial production declined unexpectedly in May driven by a fall in manufacturing, data showed. Industrial production fell 0.7% month-on-month in May, reversing a 0.3% rise in April, the Office for National Statistics said. This was the second fall in the last five months. Economists had forecast a 0.3% rise.
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Starting salaries for UK permanent staff rose to a record high levels, driven by decreasing availability of permanent staff and increasing staffing demand in June, the Recruitment and Employment Confederation, or REC, and KPMG report on jobs showed. Permanent staff salaries rose for the twenty sixth consecutive month in June to the highest level in series history. Contract staff wages rose at the sharpest rate since November 2007. The report based on results of a survey by UK recruitment consultancies and published by Markit Economics, revealed that the availability of permanent employees decreased notably in June, marking the steepest drop in the survey history. The number of available contract employees also decreased at the fastest rate since March 1998.
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The UK economy is still strong and moving in the right direction, the Quarterly Economic Survey from the British Chambers of Commerce showed. In manufacturing, balances for domestic sales, profitability confidence and capacity utilization were at their all time highs in the second quarter. At the same time, there were no balances at their all-time highs in services. Meanwhile, exports and investment balances declined in the second quarter, for both manufacturing and services, survey based on responses from 7,000 businesses revealed. Despite these falls, the second quarter export balances and most investment balances are still above their average 2007 pre-recession levels.
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German trade contracted sharply in May, with exports falling more than forecast and imports posting their biggest slump in about 18 months, data showed. While monthly exports slumped by 1.1% in May, imports dived by 3.4%, the Federal Statistics Office reported, adding to signs that Europe's biggest economy slowed in recent months. Analysts had expected the data would show exports declining by 0.4% in May, after increasing by a hefty 2.6% in April. Imports had been predicted to post a modest 0.5% rise to build on the 0.2% gain in April. The May drop in imports was the biggest since November 2012, the statistics office said. Still, when compared with May last year, exports were 4.3% higher. Imports were, however, down 0.4% on the year.
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The French economy grew 0.2% in the second quarter, the Bank of France said in its monthly survey data. The estimate was left unchanged from the previous forecast and follows a flat growth in the first quarter. The business sentiment index in manufacturing remained stable at 97 in June. The score was forecast to fall marginally to 96. The indicator for services also held steady at 93.
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The Iraqi parliament might convene next week, lawmakers said, a turnabout from an earlier decision to delay their next meeting until August. The legislature had adjourned Monday and announced no plans to return before August 12, which would have extended the country's current political deadlock by more than a month. Lawmaker Mohamed al-Khaldi, of the Sunni-led Motahidon bloc, told dpa that there are discussions between politicians about convening next week, instead of the previously set date.
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Russian Foreign Minister Sergei Lavrov in a visit to Bulgaria called on the European Commission to again take up talks with Russia over the South Stream gas pipeline project. Russia is ready for "constructive dialogue," Lavrov said after talks with Bulgarian leaders in Sofia. Talks between Russia and the EU were halted over the crisis in Ukraine, while Bulgaria suspended work on its portion of Russia's new natural gas pipeline last month after the EU raised concerns about the way contracts were awarded. The 2,380-kilometre pipeline is planned to transport Russian natural gas to Italy, with branches to Greece and Austria, via the Black Sea and across the Balkans starting in 2015.
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Berlin stepped up pressure Monday on Washington over allegations that a German intelligence service employee spied for the US, with Chancellor Angela Merkel saying the case threatened to undermine trust between the two allies. "If the reports are correct, it would be a serious case," Merkel told a joint press conference with Chinese Premier Li Keqiang in Beijing. She said the incident "would represent for me a clear contradiction as to what I consider to be trusting cooperation between agencies and partners."
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Israel launched a major military offensive against the Gaza Strip early Tuesday, in response to increasing rocket attacks by Palestinian militants. The Israel Air Force bombed about 50 targets overnight, military spokesman Peter Lerner said. He warned that Israel would gradually increase the "quantity and quality" of its targets. It would expand the air offensive with a "ground mission if required," he said.
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The Russian Foreign Ministry on Tuesday accused the US of abducting a Russian citizen, but Washington suspects the man, who also happens to be the son of a Moscow lawmaker, of large-scale cyber fraud. Roman Seleznyov was arrested by US secret service agents at the airport of Male, the capital of the Maledives, and forcibly put on a plane to Guam, the ministry said in a statement.
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Afternoon Watchlist (all times British Summer Time)
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12:30 US NFIB Business Optimism Index
13:55 US Redbook index
15:00 UK NIESR GDP Estimate
18:45 US Fed Minneapolis's Narayana Kocherlakota speech
20:00 US Consumer Credit Change
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Wednesday's Key UK Corporate Events
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Galliford Try Trading statement
Centamin Q2 Results
Interserve Trading statement
JD Wetherspoon Trading statement
Booker Group Interim Management Statement
Thorntons Trading statement
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Wednesday's Key Economic Events (all times British Summer Time)
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00:01 UK BRC Shop Price Index
00:50 Japan Money Supply M2+CD
02:30 China Consumer Price Index
02:30 China Producer Price Index
07:00 Japan Machine Tool Orders
12:00 US MBA Mortgage Applications
15:30 US EIA Crude Oil Stocks change
18:00 US 10-Year Note Auction
19:00 US FOMC Minutes

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