Like-for-like sales growth in the food division slipped from more than 5% in the first quarter to 1.6% in the second, despite the hot weather.
Merrill Lynch estimated that volumes were
probably negative given that price inflation was higher in the second quarter.
“This was against tough competition, and competitors saw a big boost from soft drinks and beer,” conceded the broker. “But even so it leaves M&S with work to do for the second half.”
However the space contribution from food was “much more than expected, so the total food sales growth of 5.4% is only slightly shy of forecast.”
A spokeswoman said there was room for improvement, but the performance had been “satisfactory”.
Meanwhile, the OFT has rapped Marks and Spencer Money for relying on “inertia” selling for its new credit card. M&S had planned to replace the charge cards of 2.3 million customers with the new combined loyalty and credit card unless they objected (The Grocer, September 27).
Following the OFT’s intervention, all storecard holders who receive the new &More card will be told they must activate the card before using it as a replacement.