Great Titchfield Street, London -- This morning saw the release of the eagerly anticipated Christmas Trading Statement from Marks & Spencer (LSE: MKS). The early bird prize goes to gilesb who managed to post the figures two minutes after the official announcement was made. The bare figures are:
UK Sales Actual percentage
6 wks to Jan 8 15 wks to Jan 8
Clothing -7.9% -6.7%
Home furnishings +13.7% +6.0%
______ ______
General -6.7% -6.0%
Foods +3.4% +3.2%
______ ______
Total -3.0% -2.8%
On a like for like basis sales figures were only provided for the 15 weeks to January 8. General like for like sales were down 8.8% whilst food was up 1.2%. Thank heaven for food will be the shout in Marks' boardroom. Overall this meant a decline of 5.3% for the UK operations which account for about 85% of the company's total sales. Overseas the company is doing better and recorded a 5% actual sales rise in the last 15 weeks.
It looks like the rumours about double-digit sales declines were somewhat exaggerated. But these results are still pretty poor. The like for like decline is compared with last Christmas, which was described as Marks worst festive period for 20 years. Those figures showed a 4.4% decline on the year before so overall Marks sales are down some 10% on their level of two years ago. And the trend does not show signs of stopping just yet. The figures for the last 6 weeks were slightly worse than for the whole 15 week period despite the fact that Marks was reported to have discounted quite heavily during this time.
But there was some much more positive news on the profit margin front. Marks said that this had improved from last year, even after the effect of the discounts. The company also said it had kept good control of its stock levels as well. This suggests to me that they are making progress on cutting the excess costs out of the business.
The trouble for Marks is that it is facing a snowball effect. Its decline has hit the front pages of the traditional as well as the financial press. As more and more people become aware of the extent of their problems it is more likely that they will stay away. It has a major task ahead in restoring its credibility. The question is will it be given the chance.
There are undoubtedly some interested vultures circling above the High Street. Now that they have some up to date information on the key trading period of the year they may decide the time is right to pounce. Either way we can probably expect to hear something in the near future. About a month ago when speculation was particularly rife the Takeover Panel, who act as referee in UK bid battles, was pressing the named parties to clarify their intentions. It would not be surprising if they did the same again. Unfortunately it will these sort of rumours that will drive the share price in the near term. Marks are unlikely to release any new trading data until they publish their full year results in the middle of May.
At the moment the jury is still out on whether Marks will be able the perform a turnaround of its business. But that is to be expected. It was never going to be possible to do a quick fix. It's a case of so far, so good.
Let us know what you think about Marks' latest efforts on the Marks & Spencer message board.
Other breaking news
Software powerhouse Sage (LSE: SGE) has been very quick to turn its attention from the bid battle for Pegasus (LSE: PGG). This morning they announced another acquisition in the United States. They have offered £270m for Best Software (NASDAQ: BEST). What a great ticker code. Sage climbed 9.5p or 1.4% to 700p.
Dixons (LSE: DXNS) announced their interim results this morning alongside plans to return £121m to shareholders. Their like for like sales for the period were up 8% but have fallen to 5% in recent weeks and margins came under pressure as well. Shares in Dixons slumped 193p or 13.2% to 1267p.
QXL.com (LSE: QXL) continue to ride the acquisition trail. This time it is a Danish auction site Jubii Auktion for £6.6m. But QXL dropped 70p or 5.4% to 1227.5p.
Metal Bulletin (LSE: MTLB), a steady performer for many years, produced a shock profits warning this morning. They said profits were expected to be roughly the same as last year rather than showing the 25% growth expected by the market. The shares plunged 205p or 12.4% to 1445p.
Let's end with a rumour. The German newspaper Handelsblatt believes that AOL Europe could become a separately listed company sometime in 2000. It is owned by the German media giant, Bertelsmann, and America Online (NYSE: AOL). Both companies apparently declined to comment.
