Profit warning sends M&S shares tumbling
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Around £1 billion has been wiped off the value of Marks & Spencer shares after the retailer issued a shock profit warning.
Shares in the high street giant plummeted 22 per cent, valuing the company at around £4 billion, after M&S reported worsening sales and deteriorating consumer confidence in the first three months of its financial year.
In a trading update rushed forward by a week, M&S said sales at UK stores open more than a year fell 5.3 per cent in the 13 weeks to June 28 amid tough high street conditions.
M&S posted profits of £1 billion last year but chief executive Sir Stuart Rose said: 'At our preliminary results in May, we reported a mixed start to our 2008/9 financial year and expressed caution about consumer sentiment.
'Since then, consumer confidence levels have deteriorated markedly and market conditions have become more challenging.'
The director of M&S's food business, Steven Esom, is also leaving the business with 'immediate effect'. He will be replaced by John Dixon, currently the head of the group's Home and M&S Direct businesses.
The clothing, food and homewares group said a consumer downturn is likely to be deeper, and last longer, than previously expected.
M&S said like-for-like general merchandise sales fell 6.2 per cent in the 13 weeks to June 28, but that it was holding market share in clothing and outperforming in homewares.
Like-for-like sales in the group's upmarket food business were down 4.5 per cent and Mr Rose said M&S is losing market share.
He said the firm had responded to more price conscious shoppers with its 'Dine in for £10' campaign and would look at similar initiatives.
Many of the UK's store groups are struggling amid fears that indebted shoppers will cut spending amid rising food, fuel and mortgage costs.
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