LONDON, Aug 20 (Reuters) - Marks & Spencer,Britain's biggest clothing retailer, said customer service wasnot at risk as it builds up capacity at a huge new distributioncentre in central England.
Shares in M&S, which also sells homewares and upmarket food,fell as much as 0.9 percent on Tuesday after Sky News reportedthat the 900,000 square foot warehouse in Castle Donington,Leicestershire had been hit by IT glitches.
It said the problems were of sufficient scale to prompt someM&S trading directors to express concerns about allowing theirstock to flow through the new centre for fear of disruptingavailability in stores.
A spokesman for M&S declined to comment on the specifics ofthe Sky News report.
However, he did say: "We've said from day one thatoperations at Castle Donington will build over a long period oftime to protect customer service. Nothing's changed and it'searly days on site as we follow the ramp-up plan."
The distribution centre, big enough to hold 3,507 Londondouble-decker buses, opened in April and is scheduled to reachfull capacity towards the end of 2014.
The fully automated site will be able to store up to 16million products and at peak times will be capable of processing1 million products a day. Eventually it will fulfil all of M&S'sonline orders.
The firm said in May it expected to incur 30 million pounds($47 million) of non-recurring dual running costs in the 2013-14year as a result of the opening of the Castle Donington site andthe transition to a new web platform.
M&S is spending 1 billion pounds over six years to 2015 onlogistics, IT and systems and is targeting 300 million pounds inannual savings.
The group is replacing more than 100 warehouses it hadacross Britain in 2009 with three huge distribution centres.Castle Donington is the second of these. The first opened inBradford, northern England. London Gateway will be the third in2014.
The Sky News report took the shine off M&S's share pricerise on Monday, achieved after positive media coverage of itsadvertising campaign for a make-or-break autumn/winter fashionrange.
M&S needs the range to succeed to reverse eight straightquarters of declining underlying clothing sales.
"The revelation of warehouse problems is a sober reminderthat the autumn fashion range will succeed or fail on the basisof the execution by M&S in terms of merchandising and stockavailability," said independent retail analyst Nick Bubb.
Shares in M&S were down 2.3 pence at 457.3 pence at 0952GMT, valuing the business at 7.4 billion pounds.
Marks & Spencer (MKS)