M&S warns more pain to come from latest reinvention

MARKS & Spencer warned of an increasingly tough trading environment after disruption from the latest attempt to reinvent Britain’s most famous retailer dented first half sales and profit margins in both its food and clothing businesses.

After over a decade of failed turnaround programmes, the 134-year-old retailer is now targeting sustainable, profitable growth in three to five years by shutting its less-successful stores. It warned on Wednesday that sales were unlikely to improve any time 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.

M&S’s latest turnaround plan was launched last November, two months after retail veteran Archie Norman joined as chairman to work alongside Steve Rowe, who has been with the company for almost three decades and became chief executive in 2016.

“The results are roughly what we expected them to be,” Mr Norman told reporters.

“I’m not saying they’re not important but they’re not the most important thing to us. The most important thing is where we are in transforming this business.”

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 have also hampered revival efforts.

First half results showed M&S’s previously reliable food business was particularly weak, with like-for-like sales down 2.9 per cent, below expectations of a 2 per cent fall, and gross margin down 25 basis points.