The largest apparel retailer on the territory of the U.K. – Marks and Spencer Group Plc, made an official statement today, revealing that it has managed to post a lesser than projected drop in general merchandise sales during the last quarter of 2013, as demand for womens clothing increased.
Non-food sales at stores open at least one year decreased 0.6% during the 13 weeks ended March 29th, according to companys statement. The median forecast by experts pointed a 0.9% drop.
Food sales on the same basis rose 0.1%, outstripping expectations for no change.
Mr. Marc Bolland, the Chief Executive Officer of Marks and Spencer Group Plc, has pledged to boost clothing sales, investing in the improvement of the style and the online offering of the company. Marks and Spencers Chief Executive Officer also bets on the new website of the company as well as on the persistent advertising campaigns.
As reported by the Wall Street Journal, the Chief Executive Officer of Marks and Spencer said: “We are encouraged by womenswear, which is showing clear signs of improvement and performed ahead of clothing.” Part of the companys statement was also cited by Bloomberg: “Despite some improvement in consumer confidence, we remain cautious about the outlook.”
The announcement by the company comes at a moment when it is considering to open 250 new stores globally over the next three years in order to raise the overseas profit by 40%. Marks and Spencer Group Plc plans to expand not only in Europe, but also in China, which is recognized by the company itself as one of its “priority international markets”. The company also revealed that it intends to expand its reach in bigger cities of China like Guangzhou and Beijing by opening new flagship stores.
However, some analysts are concerned by such a step planned by the company. One of the analysts who work for China Market Research – Shaun Rein – commented on Marks and Spencers decision of expanding its business in the Chinese market, cited by Financial Times: “They are basically conceding defeat but they can’t say that, instead they are saying they will have to grow through partners, who will put up the capital.”
He also said: “M&S are an example of what not to do in China: they came in with extremely large flagship stores in areas where the rents are too high, their pricing was in the middle range, their sizing is all wrong, and they typically attract 60-year-old Chinese women and expatriates. Few of the younger women who were their target actually shop there.”
According to Financial Times, shares of Marks and Spencer Group Plc surged 2.73% to 468.46 GBP on the LSE today, while companys one-year return rate was 20.75%. The 24 analysts offering 12-month price targets for Marks and Spencer Group Plc have a median target of 495.00, with a high estimate of 609.00 and a low estimate of 340.00. The median estimate represents a 8.55% increase from the last price of 456.00.
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