Marks & Spencer (MAKSY) shares fell sharply Wednesday after it reported signs of weakness in its food division, as cracks in the U.K. retail begin to take shape.
M&S, as the retail stalwart is known, saw shares fall close to the bottom of the FTSE 100 on Wednesday, down more than 2.59% to change hands at 319.3 pence each. The retailer reported sales in its clothing and home division were flat in the first half of the year but full price sales increased 5.3%.
The company said that it will reposition its food offering as competition from low-cost competitors heats up. In the first half of the year the company's food division saw like-for-like sales fall by 0.1%.
M&S, whose grocery store chain is premium priced, said it will now focus on more value ranges and slow the open of its food-only stores.
Marks and Spencer reported pre-tax profits of £118 million ($155 million) in the six months to Sept. 30 - four times its result for the same period last year.
The company's results don't point to a rosy picture for British retailing, which is dealing with increased inflation due to the fall in the pound since the vote to leave the European Union. Inflation hit 3% in September, according to data from the Office for National Statistics, its highest level in five years and well beyond the Bank of England's target of 2%.
The British Retail Consortium reported a 1% decline in like-for-like sales in October on Tuesday. Food sales increased 2.4% on a like-for-like basis while non-food sales decreased 0.4%.
"It was a meagre month in October for retail sales as shopping activity slumped. With total growth at its lowest since May and below the 12-month average, retailers will have cause for concern as they prepare for the crucial run up to Christmas," BRC CEO Helen Dickinson said in a statement.
M&S's result and that off fellow retailer Associated British Foods (ASBFY) dragged down the FTSE 350 General Retailers Index, which was down 0.56% on Wednesday, extending a six-month loss of 4.83%.
ABF, which owns Primark reported a 50% increase in full-year tax profits but warned that profit margins at Primark to recover in 2018.
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