By Mark Kleinman, City Editor
Marks & Spencer (M&S) has confirmed that it suffered a slump in pre-Christmas clothing sales in a trading update hastily brought forward following a leak of the numbers to Sky News.
In a statement released just after 8pm on Wednesday, M&S said that UK like-for-like general merchandise sales had fallen by 3.8% in the 13 weeks to December 29, while like-for-like food sales rose by 0.3 per cent.
Overall, like-for-like sales, a measurement which strips out the effect of changes to selling space, fell by 1.8%.
The figures are expected to underwhelm the City when trading in M&S shares opens on Thursday.
But Marc Bolland, M&S chief executive, said he was confident that the group would improve its performance with the addition of a number of key executives.
"Our Food business has performed very well with record sales over the key Christmas trading period," he said.
"Our General Merchandise performance is not yet satisfactory but we are confident that the steps being taken by the new management team will address this.
"Our plan is to transform Marks & Spencer from a traditional UK retailer to an international multi-channel retailer.
"We are making good progress against this plan.
"We are pleased with our Multi-channel and International performance. I'd like to thank all of our colleagues for their exceptional hard work and commitment over the busy Christmas period."
Total sales at M&S in the UK grew by 0.3% during the period, versus the same quarter last year, but the release of the numbers confirmed that M&S was one of the losers from the 2012 high street battle for customers' wallets.
Mr Bolland warned that the outlook for the year would be challenging given the economic backdrop in the UK.
"We expect the pressure on consumers' disposable incomes to continue in 2013. As a result we remain cautious about the outlook for the year ahead," he said.
"Our plan is to transform Marks & Spencer from a traditional UK retailer to an international multi-channel retailer. We are making good progress against this plan."
In a hastily-convened conference call with journalists, Mr Bolland said that M&S's management team made the disclosure after taking advice from bankers and lawyers.
Sources said that the disclosure was made because the trading performance reported by Sky News earlier on Wednesday night was worse than the most pessimistic of the forecasts made by City analysts.
The M&S chief executive conceded there was pressure on him and his management team to deliver an improvement in the clothing business, but pointed to the arrival in stores this summer of autumn-wear collections that bear the imprint of Belinda Earl, the retailer's new style director.
M&S also disclosed a hefty one-off charge relating to the cancellation of a bond issued by the company just over five years ago.
"In December 2007 the group issued £250m of 30-year puttable callable bonds which included a coupon rate reset after five years based on a fixed underlying 25-year interest rate," the company's statement said.
"On this basis the rate was reset at 9%. In light of continued low long-term market interest rates and the successful bond issuance in December, the group has decided to buy back and cancel these bonds which will result in a one-off non underlying finance charge of circa £75m in the current financial year."
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