M&S sales hit by British retailer’s latest reinvention

(LONDON) REUTERS: Sales at Marks and Spencer fell in the first half of its financial year, with demand for clothing and food hit by disruption from the latest attempt to reinvent Britain’s most famous retailer.

After more than a decade of failed turnaround programmes, M&S is now targeting sustainable, profitable growth in three to five years by shutting less successful stores. It warned on Wednesday that sales were unlikely to improve soon.

“Trading conditions remain challenging and the headwinds from the growth of online competition and the march of the discounters remain strong in all our markets,” it said.

Shares in M&S, which have fallen four percent so far this year, were down 2.2 percent at 09:00 GMT.

M&S launched its latest turnaround plan last November, two months after retail veteran Archie Norman joined as chairman to work alongside Chief Executive Steve Rowe, a company lifer.

Like other established retailers, M&S is trying to deal with the shift of clothing sales online along with unrelenting price competition from supermarkets and discounters.

Pressure on consumer spending, a shift in expenditure towards experiences and away from clothing, as well as unhelpful weather trends have also hampered efforts to revive its business.

Results on Wednesday showed that its previously reliable food business was particularly weak, with like-forlike sales down 2.9 percent - below expectations of a two percent fall and reflecting the need for price cuts.

Gross margin in the division fell 25 basis points.

Sales in its clothing and home division - long the nation’s first port of call for school uniforms, interview suits and underwear - fell 1.1 percent on a like-for-like basis while its gross margin was down 20 basis points.

“Against the background of profound structural change in our industry, we are leaving no stone unturned and reshaping our business, its organisation and culture,” said Chief Executive Rowe.