Forecasts are already rolling in about how difficult this Christmas will be on the high street. They range from the “toughest for 30 years” to “armageddon” depending on who you talk to. But one thing is for sure; the boy-band will have to make a sizeable impression on the British public for M S to be laughing in January. Sales figures from the retailer yesterday did not make happy reading. UK like-for-like sales over the 13 weeks to September 27 fell by 6.1pc.
Within this, general merchandise sales that’s sales of everything bar food fell by 6.4pc, while food sales fell by 5.9pc. Although the latter figure was better than analysts had forecast, margins are likely to fall by 100 basis points over the year to March 2009. The credit crisis has dented M S as much as other retailers. However, it was details about M S’s capital expenditure cutbacks that really piqued observers’ interest.
Declining sales in dire economic circumstances are one thing, but scaling back an ambitious and so far unfinished store refit and opening programme, as M S said it would do yesterday, raises questions over the retailer’s long-term strategy. Sir Stuart Rose, M S’s executive chairman, went into the retailer in 2004 to transform the chain. Yesterday the super-charged, glistening M S that Sir Stuart had hoped to create was remoulded into a slightly less ambitious beast.
Indeed, Sir Stuart could leave the retailer in 2011 with his transformation incomplete. One of Sir Stuart’s key aims has always been to radically overhaul M S’s creaking store network. Last year a large part of M S’s 1.1bn capital expenditure went on store refurbishments. This year that figure will be cut to 700m from 800m- 900m, and next year it will drop to 400m. Most of this spending will be on “supply chain and information technology systems”, the company said.