The retailer said that while its adjusted pre-tax profit for the six months to 29 September rose 2% to £223.5m – ahead of market expectations – clothing and home revenues were down 1.1% on a like-for-like basis.
Total revenue for that division – which has struggled for years – was down 2.7%. M&S said that reflected the impact of its store closure programme, which will see 100 sites shut by 2022.
Like-for-like food revenue fell 2.9% “reflecting tough trading”, the chain admitted. It also pointed to a reduction in promotion activity and the timing of Easter.
M&S shares opened 2% higher but later took a tumble – down more than 3.5% as its gloomy outlook weighed.
It updated investors on its progress as the wider high street battles the challenge posed by rising operating costs and weaker consumer spending amid uncertainty over the outcome of Brexit negotiations.
M&S, which saw rival House of Fraser join the casualties of the squeeze, said business conditions “remained challenging”.
It warned that it did not expect much improvement in sales in the near future – pointing to additional headwinds from “the growth of online competition and the march of the discounters”.
M&S said it was still getting to grips with improving the basics of its online channels – which it has previously said is a top priority.
It has placed struggling physical stores in the firing line and chief executive Steve Rowe admitted there were more changes to come if M&S was to achieve its aims.
He said: “We are on track to restructure our store portfolio with over 100 full-line closures and expect to see newly remodelled stores open next year.
“We are fixing the basics of our online channel and there are very early signs of improvement.
“Every aspect of our ranges, how we trade, our supply chain and marketing is undergoing scrutiny and change.”
Lee Wild, head of equity strategy at Interactive Investor, said of the share price increase: “The Marks & Spencer PR machine is in full swing and Steve Rowe is telling investors exactly what they want to hear.
“The company has been in desperate need of a major overhaul for years and, under a new and more dynamic leadership team, is getting just that.
“M&S is admitting its shortcomings and promising to deliver what investors have been screaming at it to do for years.
“Modernising the clothing range, focusing on good quality but affordable ‘must-haves’, and selling more of what people want is reassuring to hear.
“So is an acknowledgement that the embedded M&S culture is siloed, slow, and hierarchical, and that M&S is becoming a faster, more commercial and more digital business.”