Bellwether British retailer Marks & Spencer missed forecasts for underlying fourth quarter sales after it failed to buy enough best selling womenswear lines to satisfy demand.
The UK's biggest clothing retailer, which also sells homewares and upmarket foods, said on Tuesday it would, however, meet expectations for 2011/12 profit thanks to cost savings.
Shares in M&S fell nearly 3 percent after it said sales at stores open over a year fell 0.7 percent in the 13 weeks to March 31, its fiscal fourth quarter.
That compared with analyst forecasts of a rise of 0.4-1.6 percent, with a consensus of 0.8 percent, according to a company poll of 10, and a third quarter rise of 0.5 percent excluding VAT sales tax.
The fourth quarter outcome included a 2.8 percent fall in general merchandise, mainly clothing, like-for-like sales and a 1.0 percent rise in food sales, against consensus forecasts of increases of 0.2 percent and 1.6 percent respectively.
In clothing, menswear, lingerie and kidswear performed strongly, the firm said.
In womenswear our performance was mixed, with some key areas trading well. However, we performed less well in other areas where we were short of stock in a number of best-selling lines.
Chief Executive Marc Bolland told reporters the firm sold 100,000 items of knitwear during the quarter but could have sold 300,000.
He said M&S was taking steps to address the problem by strengthening its merchandising capabilities and had had a good start to the new spring/summer launch.
Total group sales rose 0.8 percent in the quarter.
Many UK retailers are still struggling as consumers grapple with inflation, muted wage growth and government austerity measures, and worry about job security and a stagnant housing market.
M&S has, however, performed better than most as its older and more affluent customers have been less impacted by the economic downturn.
Giving guidance for the 2012/13 year it said it expected gross margin to be in a range of flat to up 25 basis points, operating costs to increase 3-5 percent and capital expenditure of about 825 million pounds ($1.31 billion).
Shares in the 128-year-old group, which prior to Tuesday's update had increased by 17 percent over the last three months, were down 10.2 pence at 357.5 pence at 0715 GMT, valuing the business at 5.76 billion pounds. ($1 = 0.6312 British pounds)
(Reporting by James Davey; editing by James Jukwey)