UK retailer Marks and Spencer said today (30 September) that sales in the company’s food division have become “positive” for the first time in eight quarters.
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Speaking during the group’s conference call, executive chairman Sir Stuart Rose told analysts that he believes price investments made in the grocery division over the last year have begun to pay off.
“It was the right thing to do. Food has become positive for first time in about eight quarters. I hope we can keep it up,” he said.
“Footfall has remained pretty robust and has outperformed the market by about 1%. I think average basket value is up by just under 1%,” Rose told analysts. “The Dine In continues to be a strong weapon, as does the Wise Buy which I think is about 15% of our sales at the moment. Simply Foods also continues to outperform core foods.”
Asked about competition from the likes of upmarket retailer Waitrose, Rose said he accepts that as a challenge.
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By GlobalData“The Waitrose number is running at 1.8% like-for-like against our flat number. You do have to put into that a year-on-year calculation in terms of [what] our inflation has been and what their inflation has been. Yes there has been a purple patch and we accept that and we see that as a challenge but at the end of the day the challenge is not as great as you make out.”
He added: “With Waitrose’s Essentials range, they’ve put a lot of those prices up and they’re not as good value as they would appear to be. Like-for-like pricing in Marks and Spencer is very sharp at the moment. But yes they’ve had fairly good results.”
Marks and Spencer reported an improvement in second-quarter sales today (30 September), but said it expects 2010 to be a “tough year”.
For the 13-week period to 26 September, group revenue grew 2.7%, driven by online sales, which were up by almost a third. International sales remained buoyant, climbing 9.6%.
Rose, who is due to retire from M&S in July 2011, told analysts that nothing had changed with regard to the recruitment of a replacement CEO.
“I think it is unfortunate that we do, and we will probably have a continuing intensity of noise about this subject. We said at the AGM that we would appoint a chief executive from whatever source in 2010 and that is unlikely to be 1 January, it’s unlikely to be 31 December, so it will be somewhere between those times.
“At some point in time we’ll come out with the right answer and hopefully one that you will applaud us for, but there is no change.”
Asked whether he wishes to remain as chairman, Rose replied: “It’s not a question that I wish to remain chairman, the board has decided it is better for us to change the chief executive before we change the chairman. If and when we get a new chief executive, I think you’ll find that my intention is for me to stay on long enough to ensure that person, either internal or external, gets saddled up successfully.
“I am not going to be fighting to stop myself moving on. I’m six years in this business, I’m a man of a certain age so I won’t be screaming and yelling saying please don’t get rid of me.”
