M&S rides storm after clothing sales setback
MARKS & Spencer boss Steve Rowe insisted yesterday his plan to revive the retailer’s fortunes is on track despite a slump in clothing sales.
Rowe, who made reviving its struggling general merchandise a priority after taking over as chief executive in April last year, said its market share had held up for the first time in over two years after it increased efforts to improve quality and availability and reduce promotions in favour of lower prices.
The group is also switching floorspace from clothing to food and cutting exposure to loss-making international markets by closing stores in 10 countries.
A quarter of its clothing and homeware space is to be “refreshed” over five years, while about 250 new Simply Food stores will be opened by 2020.
Annual profit before tax and adjusted items, down 10.3 per cent to £613.8million, beat expectations and revenue was up 2.2 per cent at £10.62billion.
Shares rose 5¾p to 393½p on the news. But profits plunged by 63.5 per cent to £176.4million after a £437.4million hit from changes to pay and pensions as well as store closure costs.
Same-store clothing and home sales were down by 3.4 per cent over the year but the decline was 5.9 per cent over the fourth quarter. Annual food sales fell by 0.8 per cent. Rowe said: “There have been some costly but necessary decisions taken.
“This is just the beginning. We will continue to adapt and deliver robust foundations for the future. We remain on track with our plan to put the customer back at the heart of M&S. As we have made improvements to our clothing and home product … we are starting to stabilise market share and, importantly, have seen full-price market share growth as we removed excessive discounting.”
Laith Khalaf, senior analyst at investment firm Hargreaves Lansdown, said: “Steve Rowe is pulling out all the stops to turn performance around… but it’s not going to be an easy ride.”