While the high street retailer recorded its best ever Christmas period in food sales, general merchandise sales were hit hard in Q3 2015.
In the 13 Weeks to 26 December 2015, food sales were up 3.7%, while through Christmas week they rose 17%.
General merchandise sales (including clothing) were disappointing, down 5% – its worst Christmas for clothing sales, which it said was due to challenging trading conditions and a shortage of availability.
The retailer made a choice to hold off from heavy discounting and promotion whilst the market was flooded with price cuts starting from Black Friday and continuing throughout December – a strategy it acknowledged had a detrimental effect.
Steve Rowe, who ironically took over as head of general merchandise six months ago, is in line to take the top job at the retailer.
Bolland will stay on as chief executive until April.
An M&S statement read: “Against this backdrop we held back from the heavy discounting seen across the market especially in the run up to Christmas. While this had an adverse impact on sales we protected gross margin, which we now expect to come in at the top end of the guided range. However, we acknowledge there is more to do to address the disappointing general merchandise sales, and the new team are focused on the three key priorities of availability, ranging and design.”
Online sales were up 20%, driven by strong customer traffic.
Bolland said: “M&S had an excellent Christmas in food, delivering record Christmas sales and strongly outperforming the market. General merchandise sales were disappointing. We continued to prioritise gross margin and held back from the heavy discounting seen across the market in the run up to Christmas.”
Robert Swannell, Marks and Spencer Group chairman, said: “Over the last six years Marc Bolland has led Marks & Spencer through a period of necessary change. Over this time, the company has made significant investment in enhanced infrastructure and capabilities.
“It is now positioned for a digital age, with its own online platform and dedicated e-commerce distribution centre, improved design and sourcing capabilities in general merchandise and an industry-leading track record of growth and innovation in the food business.
“Marc has put ‘Plan A’ at the heart of the business and leaves a strong sustainability legacy. The board is very grateful to Marc for his leadership in this important period of enhancing Marks & Spencer’s competitive position for its future.”