Marks and Spencer plc (MAKSY) posted weaker-than-expected first quarter revenues Tuesday as U.K. sales slowed amid a pullback in spending linked to the country's surging inflation and slowing growth.
M&S said like-for-like sales for the three months ending on July 1 rose 2.7% to £2.531 billion ($3.26 billion) while U.K. sales, which comprise more than 90% of the group's revenue, fell 0.5% to £2.259 billion. Food sales in Britain, a traditional outperformer when inflation rises, fell 0.1% from the same period last year, the company said, while sales in the group's Clothing & Home division slumped 1.2% to £852 million.
"Trading in the first quarter was in line with our expectations and we are on track with delivery of the plan we announced last year." said CEO Steve Rowe. "I am pleased that we continue to grow full price sales in Clothing & Home, with reduced discounting and no clearance sale in the quarter. In our Food business, we delivered strong growth from new Simply Food openings, and are prioritising better ranging and stronger promotions."
M&S shares slipped 1.2% in the opening 45 minutes of trading to change hands at 334 pence each in London, extending their year-to-date decline past 4.4% compared to a 6% decline for the FTSE 350 General Retailers subindex.
British shoppers have been paring back non-essential purchases over the past few months as inflation surges to a four-year high, thanks in large part to the pound's steep declines on foreign exchange markets, and wage growth remains relatively flat.
A recent survey of consumer confidence, published last week by research group GfK, slipped to a one-year low of -10 thanks to "the twin pressures of higher prices and sluggish wage growth are squeezing household finances and adding to widespread fears of a Brexit-induced economic slowdown," the group said.