Marks and Spencer recovery stalls as clothing sales fall

Marks and Spencer's recent revival has suffered a setback after it reported a fall in non-food sales.

Like-for-like sales of general merchandising - which is largely clothing - fell 0.4% in the 13 weeks to 27 June, a period that M&S described as "challenging".

That compares with growth of 0.7% in the previous quarter, which had been M&S's best performance for nearly four years.

Like-for-like sales of food rose 0.3%.

Chief executive Marc Bolland said: "We continue to make progress against our key priorities. Our food business did very well in a difficult market."

Sales through M&S's website grew 38.7% from a year earlier, after a sharp slump in online sales at the beginning of last year immediately after the site was re-launched.

The drop in general merchandise sales was better than the 1% slide forecast by analysts, but has dashed hopes that last quarter's growth - which marked the division's first expansion after 14 consecutive quarters of decline - would continue.

'Pressure mounting'

Since Mr Bolland took over the helm in 2010, he has invested millions in trying to turn around its clothing division, hiring well known models such as Rosie Huntington Whiteley and David Gandy.

And last year, it took on Hong Kong-based brothers Neal and Mark Lindsey - who helped rival Next improve the way it buys clothing - to help improve its supply chain.

Analysts said the latest figures were disappointing and put pressure on Mr Bolland to speed up the division's transformation.

"Pressure is mounting for Bolland to come good on his promises and focus more on increasing margins through supply-chain savings and shift away from heavy discounting," said Julie Palmer, partner at Begbies Traynor.

Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers, said general merchandise was "the elephant in the changing room".

"Whether M&S can ever return to former glories by enticing clothes shoppers back to its stores is arguably its largest challenge, even though the more recent experience implies at least a stabilisation of previously dropping numbers," he added.

M&S shares, which have risen 25% over the past year, rose 0.6% to 550p after the trading update.