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Monday 06th of October 2008 05:36:38 PM

The United Kingdom's largest retailer, Mark and Spencer, has issued a report which reveals a significant sales decline. The economic conditions in the UK and around the world are impacting all unnecessary purchases as households cut back on spending. Mark and Spencer reported the like-for-like sales in the third quarter of 2008 dropped 6.1%. This indicates acceleration in the decline of sales because the second quarter had shown a 5.3% decline.

In the retailing industry, there are many uncertainties today. The head of Mark and Spencer, Sir Stuart Rose, said the company will not be spending as much on capital expenditures as originally planned. He said, "Capital expenditure this year is now expected to be around £700m, compared to our previous guidance of £800m-£900m."

Despite the economic uncertainties in the retailing market, the financial market responded positively to Mark and Spencer's plans for cost cutting measures. The ancillary businesses that service Mark and Spencer can expect fewer orders which only exacerbates the economic conditions. The ripple effect of the downturn in retail clothing sales from t-shirts to high fashion is expected to continue as the financial conditions continue to falter around the world.

People are trying to be thrifty with their money and are spending less on household items that are not critically needed. Sir Stuart was quoted as saying, "We are being a little bit prudent. Customers are being thoughtful about expenditure but that's hardly surprising in the world we live in today. We'll cut our cloth according to our means." It is this kind of common sense approach which appeals to investors leading to rise in Mark and Spencer share values.

When looking at total global clothing sales by Mark and Spencer, the figures show a .4% increase. But the international and online sales were up 24% and 34% respectively.

(c ) Image by Steve Woods, www.sxc.hu/