Marks & Spencer (M&S) UK sales dropped by 3.4% in the last quarter, the firm said today, and it will close 25 Simply Food stores in an effort to reduce costs, resulting in job losses.
In the 13 weeks to 27 December 2008, M&S said UK like-for-like sales dropped by 7.1%, while like-for-like food sales fell by 5.2%.
Yet the firm said its food promotions have helped it to deliver an improved performance on the last half-year results.
Chairman Sir Stuart rose said: “We have made good progress on the key priorities set out at the interim results in November.
“Food showed an improved trend quarter on quarter, reflecting the initiatives put in place around better values, promotional stance, innovation, increased availability and reduced waste.
“This improvement accelerated as we entered the Christmas period, culminating in our biggest trading day ever on 23 December with record sales of over £50m.”
Rose said the closure of the “underperforming” Simply Food stores and two small chain shops could mean up to 780 jobs are lost, a move that was predicted earlier this week.
Additionally, M&S will cut up to 450 jobs at its head office in a further bid to lower operating costs.
Rose added: “We are aware that the proposed changes set out above will be difficult for those members of staff impacted, but given that we expect challenging economic conditions to continue for at least the next 12 months we believe we are taking the right action to maintain the strength of our business.”
Annual increases in pensionable pay will also be capped at 1% for staff on the M&S Final Salary Pension Scheme, the retailer said.
M&S will report its fourth quarter sales figures on 31 March. Analysts had predicted a sales drop this quarter of between 5.5% and 9.6%.
Yesterday, GMB Union warned the firm that it must give employees a sufficient period of notice if they are to lose their jobs.
