M&S profits fall as online retailer Asos booms

Jul 10, 2012

High street sales given fillip by Queen's Jubilee but Marks & Spencer doesn't benefit

ONLINE FASHION retailer Asos has announced bumper sales figures for the last quarter, up 31 per cent, while high street giant Marks & Spencer's profits are slumping – even though the British Retail Consortium has announced that the Jubilee feel-good factor gave a trading boost.

Asos, under pressure after failing to hit analysts' full-year sales growth predictions, enjoyed a jump of 10 per cent in its share price as a result. The Financial Times reports the company's UK trade was the slowest-growing part of its business, with sales up eight per cent.

The BBC reports that M&S has announced a like-for-like (meaning sales from newly-opened shops are not factored in) drop of 2.8 per cent in sales in the UK between April and June. Worldwide, and with new stores included, sales fell 0.7 per cent.

The company also announced the departure of its head of general merchandise, Kate Bostock. Her replacement will be Steve Rowe, who is the current director of retail.

CEO Marc Bolland said: "General merchandise underperformed in a difficult trading season. We are confident we are taking the necessary steps to address this."

The firm had problems with supply early this year, running out of stock for some of its best-selling womenswear items in April. Bolland said its food business had performed well, however.

Meanwhile, monthly figures from the British Retail Consortium (BRC) released today show that the high street benefited from the Queen's Diamond Jubilee, the so-called 'bunting boost'. The celebratory atmosphere meant consumers spent more - presumably on food, clothes and other items, not purely on decorative flags.

The BRC said sales for June rose by 1.4 per cent like-for-like from June last year, according to The Daily Telegraph. BRC director-general Stephen Robertson said: "It was the bunting boost. June was saved by the feelgood lift of the Jubilee, showing how crucial these temporary factors are in our difficult trading conditions."

Yesterday JJB sports also blamed bad weather for poor sales as it posted a profits warning – citing England's poor performance in Euro 2012 as an additional factor. Chairman Mike McTighe announced he would step down in September.

But Robertson warned that the outlook is not rosy. The BRC report said there were indications that consumers had already tightened their belts after the Jubilee glow had faded.

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