Marks and Spencer has today issued its Christmas trading statement, showing that, in the 13 weeks to 27 December, its UK like-for-like sales fell by 7.1%. The company has announced the closure of two of its department stores and 25 Simply Food outlets. Over 1,200 employees will be made redundant. Its pension scheme will also become less generous.
Marks’s executive chairman, Sir Stuart Rose, who appeared on the Today programme this morning, said that he expected the current “challenging” economic conditions to continue for at least the next twelve months and that the cuts were necessary to maintain the strength of the business.
The chief executive of Next, Simon Wolfson, who also appeared on Today, said that the 2½ per cent cut in VAT had been a “missed opportunity”; in worrying economic times, people would feel happier if the money was put directly into their pockets. The cut was irrelevant at a time when retailers were already offering substantial discounts.
Wolfson went on to say that the big problem in the sector was the unavailability of bank credit; the banks were being asked to repay the Government at high interest rates, but were at the same time being told to lend at low rates; this was unsustainable.
Neither Rose nor Wolfson thought that the retail sector was “facing Armageddon”, but both agreed 2009 would be a tough year.
The interview was an excellent reflection of how retailers are feeling in the current economic climate; I do hope that people were listening at the Treasury and DBERR.
