Byline: James Fallon

LONDON — Despite improving margins, lack of sparkle in its women’s fashion selections has left Marks & Spencer PLC far from a turnaround and raised further questions about the future of chairman and chief executive Luc Vandevelde .
The U.K.’s largest apparel retailer said Tuesday sales in its clothing, footwear and gifts division fell 4.8 percent in the eight weeks ended Jan. 20, which include the key Christmas trading period. The main problem area remains women’s wear, where Marks & Spencer continues to suffer from dowdy designs and not enough fashion offerings.
Sales in the 16-week period ended Jan. 20 dropped 9.3 percent versus the comparable 1999-2000 period.
Marks & Spencer said its Brooks Brothers subsidiary registered a 1.6 percent sales increase during the eight-week period and a 4.5 percent rise during the four-month time frame. A spokeswoman for the retailer said no further details of Brooks Brothers’ performance were available.
The corporate performance came against weak Christmas periods in 1999 and 1998. Apparel sales during Christmas last year were down 20 percent versus 1998, and apparel sales during Christmas 1998 were down 5 percent on the year earlier.
But the company is benefiting from “significant” improvement in margins during the year, Vandevelde said. It also will enter the spring season with a clean inventory position despite having to take higher markdowns in its post-Christmas sale to clear excess inventories.
The news cheered some analysts, who said they offer the first indication a turnaround might be ahead. But they criticized Marks & Spencer’s sales performance, saying it was worse than they expected. Analysts also were concerned by Marks & Spencer’s statement that the 25 stores it’s relaunched under its new retail format registered only a 4 percent improvement in sales during the Christmas period.
Several analysts downgraded the retailer’s shares from “hold” to “sell.” Despite this, the news of the margin improvement sent Marks & Spencer’s shares up 9.5 cents to close Tuesday on the London Stock Exchange at $3.02. Dollar figures have been converted at current exchange.
Vandevelde, who joined Marks & Spencer in February 1999, had trumpeted a major turnaround at the retailer in November when he promised “a wonderful Christmas” with significant sales gains.
He’s also under pressure from an often-repeated, self-imposed deadline for turning the company around. Vandevelde has said that if there aren’t firm signs of improvement at the company by 2002 than he would expect Marks & Spencer’s board to get rid of him. There has been speculation over the last few months that Vandevelde’s bluntness might come back to haunt him next year.
“We did not achieve the results I was looking for over the Christmas period,” Vandevelde admitted in a statement Tuesday. “Food and home sales made further progress but sales of clothing were poor. The overall appeal of our adult clothing ranges was simply not good enough.
“We must offer our customers adult clothing ranges of consistently better design and appeal. I am absolutely committed to making this happen.”
Despite his prediction in November, Vandevelde has always made it clear no significant changes would be visible at Marks & Spencer until the spring 2001 season. The spring collections will be the first to be affected by the retailer’s new design and sourcing methods. In the past Marks & Spencer ordered 100 percent of its lines from manufacturers six months before the selling season began. From now on it will order 50 percent of the collection six months before, 40 percent as the season begins and 10 percent during the season, Vandevelde said. This will give Marks & Spencer greater flexibility to respond to fashion trends.
Overall Marks & Spencer’s sales in the eight-week period ended Jan. 20 were down 1.1 percent and 2.3 percent on a same-store basis. Sales during the 16-week period were down 3.9 percent and 5.1 percent, respectively. The group’s strongest performer was its home furnishings division, where sales were up 6.7 percent in the eight-week period and 9.5 percent in the 16-week one.

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