After unveiled its worst sales figures for almost a decade, Britain’s biggest clothing retailer Marks & Spencer has announced it will lay off more than 1,200 people and close more than two dozen shops, mostly smaller food only stores.
Responding to the recession, M & S slashed prices in the run up to Christmas to keep customers coming in. Executive Chairman, Sir Stuart Rose, confirmed it worked, but at a cost: “I don’t think Marks & Spencer had that bad a Christmas and you need to look at what is underlying the numbers to understand what is going on. As many customers came into our stores as last year and they actually bought more volume, we just charged them less for it because we decided that they needed some good value. So, as a result our sales are down and our profits will be down, but the customers came in and they had a pretty good time.” In the 13 weeks before Christmas, M & S group sales – which include the internet and 300 international shops in 40 countries – fell 1.2 percent compared with the same period last year. In the UK they were down 3.4 percent. Clothing sales fell 6.5 percent and sales were 1.1 percent lower. Like-for-like sales – which strip out the effects of new shops opened in the past year – were even worse. Richard Dodd, spokesman for the British Retail Consortium, the trade association representing UK retailers, said everyone in the industry realises they are facing hard times: “Conditions are going to go on being very, very tough for retailers well into 2009 and they are going to have to go on discounting and they are going to have to really scrutinise every aspect of their businesses and certainly we are likely to see more jobs going, unfortunately, and we probably will see some individual retailers failing in 2009, as we did last year.” Among other UK retailers, fashion chain Next and department store group Debenhams reported relatively robust trading over Christmas, while John Lewis and Waitrose saw sales improve, but economists warned the worst may be yet to come as unemployment rises.