Shares in Marks & Spencer (MKS.L) plunged by more than 10% on Thursday after the company said that difficulties with wasted food, menswear, and its supply chain held back its drawn-out recovery in the third quarter.
The retailer said that revenue and volumes improved in its food division in the three months to 28 December, but one-off issues held it back from “delivering a stronger result”.
Revenue in its clothing and home division fell by 3.7%, with the company pointing to issues with menswear sales and gifts. It said that its womenswear division continued to improve.
After falling by more than 11% earlier, shares in the company were down by about 10% at 10am.
Marks & Spencer said that changes made earlier in its financial year had “arrested the worst of the issues” it experienced in the first half of the year, and noted that it was “progressively building a much stronger team for the future”.
Online revenue from its clothing and home division was up only 1.5%, which Marks & Spencer said was lower than expected. Sales were impacted by discounting from competitors and lower furniture dispatches.
The retailer has been undergoing a three-year restructuring process under CEO Steve Rowe, but the recovery has taken longer than expected.
The company made no changes to its full-year guidance, but noted that margins would come in at the lower end of expectations.
In September, Marks & Spencer was dumped out of the FTSE 100 index, which tracks the UK’s top 100 listed companies. It was the first time the iconic retailer was not included in the index since 1984.
Though it is seen as a bellwether for the UK high street, the firm has struggled with falling clothing sales and slumping profits over the last decade.
Marks & Spencer, however, is hoping that its food delivery tie-up with Ocado can help turn things around.
“Competition in the clothing and home space is at fever pitch, and it’s a battle M&S isn’t winning,” said Sophie Lund-Yates, an equity analyst at Hargreaves Lansdown.
“Most striking is the fact online sales grew a paltry 1.5% in the third quarter, lower than M&S expected, and due to the relentless discounting in the sector in December.”