Marks & Spencer Prof­its Rise as Cloth­ing, Food Sales Fall

First-half rev­enues were down 3.1 per­cent fol­low­ing de­clines in the two big­gest cat­e­gories.

WWD Digital Daily - - News - BY SA­MAN­THA CONTI

LON­DON — Prof­its at Marks & Spencer climbed 5.8 per­cent to 89.8 mil­lion pounds in the first half as the com­pany kept costs un­der con­trol, while rev­enues dipped

3.1 per­cent to 4.97 bil­lion pounds due to de­clines in cloth­ing and food, two of the re­tailer’s big­gest di­vi­sions.

Cloth­ing and home sales were down 2.7 per­cent, im­pacted by store clo­sures, while on­line cloth­ing sales growth out­paced the mar­ket, M&S said in its in­terim re­port on Wed­nes­day. Food rev­enue, mean­while, fell 0.2 per­cent, re­flect­ing “tough trad­ing” and the com­pany’s new strat­egy to slash pro­mo­tional ac­tiv­ity.

M&S said it would con­tinue to re­tool its cloth­ing of­fer, which has long been a drag on growth.

The re­tailer said its cloth­ing and home di­vi­sion has been the vic­tim of an “ag­ing cus­tomer base, a very wide range, a weak sup­ply chain and an ag­ing store port­fo­lio,” al­though it still has a “very strong cus­tomer fran­chise and mar­ket po­si­tion.”

The de­cline in cloth­ing and home fol­lowed the clo­sure of 21 stores and three out­lets in the pe­riod. Dis­counted sales were broadly level with the cor­re­spond­ing pe­riod last year, with the im­pact of sale tim­ing off­set by a planned re­duc­tion in pro­mo­tions.

M&S said its ob­jec­tive is to re­shape its buy, re­duce the num­ber of op­tions, buy more “stylish and con­tem­po­rary prod­uct” in greater depth, and de­liver mar­ketlead­ing value.

“By fo­cus­ing on stylish and wear­able ‘must-have’ essen­tials and build­ing on our strong cus­tomer fran­chises in denim, lin­gerie and back-to-school and work­wear, we will shift back to­ward fam­ily-aged customers seek­ing style, qual­ity and value,” the store said.

In the first half, the re­tailer re­duced the num­ber of lines on of­fer and bought deeper into key cat­e­gories such as dresses. It also re­duced the price of ev­ery­day lines, such as men’s chi­nos. The store has also put a big­ger fo­cus on dig­i­tal cam­paigns to push ev­ery­day essen­tials and value cloth­ing.

M&S has also turned its at­ten­tion to food, which has been suf­fer­ing from too many pro­mo­tions and from com­pe­ti­tion against U.K. su­per­mar­kets and for­eign dis­coun­ters such as Aldi and Lidl.

The com­pany said it plans to re­duce prices and re­move “com­plex and con­fus­ing” pro­mo­tions. M&S is reengi­neer­ing its food cat­e­gories and de­vel­op­ment pipe­line to broaden its ap­peal and fre­quency of shop.

In a state­ment Wed­nes­day, M&S said that over re­cent years, the busi­ness has be­come ex­ces­sively de­pen­dent on both short-term pro­mo­tions and com­plex and con­fus­ing multi­buys. “We have al­ready re­duced the prices of more than 100 ev­ery­day lines with many more to go,” the com­pany said.

Marks & Spencer chief ex­ec­u­tive of­fi­cer Steve Rowe added that against the back­ground of pro­found struc­tural change in the in­dus­try, “we are leav­ing no stone un­turned and re­shap­ing our busi­ness, its or­ga­ni­za­tion and cul­ture.

“This phase is about re­build­ing the foun­da­tions of the fu­ture M&S and we are judg­ing progress as much by the pace of change as by the trad­ing out­comes. M&S is be­com­ing a faster, more com­mer­cial and more dig­i­tal busi­ness.”

He said the com­pany is on track to re­struc­ture its store port­fo­lio with more than 100 store clo­sures, while it ex­pects to see newly re­mod­eled stores open next year. The com­pany said it is also fix­ing the ba­sics of its on­line chan­nel “and there are very early signs of im­prove­ment. Ev­ery as­pect of our ranges, how we trade, our sup­ply chain and mar­ket­ing is un­der­go­ing scru­tiny and change.”

Marks and Spencer

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