Drop in profits for M&S as UK retail sales growth stalls in October

marks and spencer

There was a drop in UK retail sales in October 2012, new figures showed today, suggesting that there will be bumps along the road to economic recovery after nine months in recession.

Retailers saw the weakest sales growth for almost a year, as consumers limited their spending to essential items and remained cautious about making large purchases.

According to the latest Retail Sales Monitor report from the British Retail Consortium (BRC) and professional services firm KPMG, retail sales values last month were down 0.1% on a like-for-like basis from October 2011, when they were 0.6% lower than a year earlier.

Sales rose by 1.1% on a total basis, against a 1.5% rise in October 2011. Excluding Easter, this is the lowest growth seen in total sales since November 2011. The report noted that the slowdown from the previous month was seen across all categories, including online sales.

Underlining the challenges faced by UK retailers, high street chain Marks and Spencer (M&S) today reported a 9.7% drop in pre-tax profit to GBP290m for the six months to the end of September, compared to the same period last year. On a like-for-like basis food sales were up 1.1%, while clothing and homeware sales declined by 4.3%.

M&S noted, however, that its second quarter was stronger than the first in all areas of the business. Chief executive Marc Bolland said that the company had taken steps to address short term merchandising issues in General Merchandise, resulting in an improved performance, and the Food division outperformed the market on a like-for-like basis.

Looking ahead, M&S said that it is cautious about the outlook for the rest of this year as recent trading has been volatile and there is continuing pressure on consumers’ disposable incomes.

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