M&S Christmas total revenues fall 3.9%

(Sharecast News) - Troubled high street retailer Marks & Spencer maintained full year guidance as third quarter group total revenue fell 3.9% to £3.04bn.In the UK, total revenue over the Christmas period fell 2.7% to £2.7bn on a constant currency basis. Clothing & home product like-for-like revenue was weaker than expected, down 2.4% to£1.1bn against a consensus of 1.8% while food was ahead of forecasts, down 2.1% to £1.6bn against a consensus 3%.Total international sales slumped 15% to to £262m, reflecting the impact from the sale of the Hong Kong business to its franchise partner and the closure of stores in loss making exit markets.Excluding these effects, international revenue fell 1.4% at constant currency largely due to the timing of franchise shipments and investment in improved pricing."The combination of reducing consumer confidence, mild weather, Black Friday, and widespread discounting by our competitors made November a very challenging trading period. However, overall our 13-week performance was steady with some early encouraging signs," said chief executive Steve Rowe."Against the backdrop of well publicised difficult market conditions our performance remained steady across the period. Our Food business traded successfully over Christmas as customers responded to improved value. Our transformation programme remains on track.""Customers responded well to our Christmas ranges and campaign resulting in solid volume growth over the Christmas period, with the majority of stores delivering like-for-like revenue growth."Analysts at RBC capital markets said they believed M&S had benefited from its status as an "event-driven, convenient offer"."It states it is seeing some early signs of volume growth in response to lower prices, however we think this process will take time. Like-for-like sales overall are at the softer end for the industry as M&S is seeing price deflation in an inflationary sector and has chosen to cut back on promotions," they said in a note."M&S has some rollout potential, but longer-term growth prospects may be constrained by its already high market share in the premium segment, and its low basket size online, which makes the economics of home delivery unattractive."Neil Wilson at Markets.com said the "big bright spot" was a 14% rise in online sales."At last perhaps a sense that M&S is getting that side of business fit for purpose. Still no participation in Black Friday though is a concern although we wonder whether the rush to the bottom is the correct way to go for retailers," he said.He added that the results were "not as bad as feared - a good microcosm of the high street in general over Christmas", but warned that "Marks clearly has a long way to go to turn things around"."Full year guidance unchanged. So far not a significant sign of improvement but against a tough back drop and in the depths of a turnaround it's too early to write it off. Marks has been here before and come out fine."