British retailer Marks and Spencer issued a shock profit warning today and said a consumer downturn was likely to be deeper, and last longer, than previously expected, hammering its shares.
The clothing, food and homewares group, with 560 stores in the UK and 18 in the Republic, said in a trading update rushed forward by a week that sales at UK stores open more than a year fell 5.3 per cent in the 13 weeks to June 28th.
It added that Steven Esom, its head of its upmarket food business, was leaving after just one year in the job following a "significantly weaker performance" in that part of the group.
Chairman Stuart Rose said the sales update was "effectively an earnings downgrade" and warned others would follow suit.
"I can't believe this is a Marks & Spencer (M&S) exclusive problem, I think this is definitely a retail slowdown and we don't know where it's going," he told reporters on a conference call.
"This is certainly going to go right through into 2009. There is absolutely no sign of relief," he added, saying the downturn was likely to be "longer and harder fought" than previously expected.
M&S shares, which have more than halved in value over the past year, fell 21.7 per cent to 249p, near 7-year lows.
Many of Britain's store groups are struggling amid fears that indebted shoppers will cut spending amid rising food, fuel and mortgage costs.
M&S said like-for-like general merchandise sales fell 6.2 per cent in the 13 weeks to June 28th, 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 Rose said M&S was losing market share.