Marks & Spencer has suffered recent falls in its clothes and meals gross sales, with chief government Steve Rowe promising to depart no “no stone unturned” in his try to revive the struggling enterprise.
Pre-tax income rose 7.1% to £126.7m within the six months to 29 September regardless of like-for-like gross sales falls of 1.1% and a couple of.9% in its clothes and meals halls, respectively. Earnings had been depressed by practically £100m of one-off prices, round half of which associated to 24 UK retailer closures. Afurther £11.1m lined a spherical of administration jobs cuts.
It has been a tough six months for vogue retailers because the summer time heatwave deterred buyers from visiting the excessive road at a time when rising prices are making massive retailer estates financially unviable.
Rowe spelled out the seriousness of the issues confronted by the UK’s greatest clothes retailer, which he mentioned “has an ageing buyer base, a really big selection, a weak provide chain and an ageing retailer portfolio.
“In opposition to the background of profound structural change in our business, we’re leaving no stone unturned and reshaping our enterprise, its organisation and tradition,” he mentioned.
Complete clothes and homewares gross sales fell 2.7%, reflecting retailer closures which can be a part of a plan to shut 100 branches by 2022.
Confronted with the expansion of rivals resembling Primark M&S mentioned it has lowered tons of of costs and extra not too long ago has employed This Morning presenter Holly Willoughby to entrance its clothes promoting.
Gross sales are falling in M&S’s meals halls, as cheaper rivals resembling Aldi and Lidl step up their enlargement. The retailer reported “powerful buying and selling” with new meals boss Stuart Machin tasked with modernising the chain, a programme that thus far has concerned reducing costs and eliminating “complicated” promotions.
Rowe complained the meals enterprise has develop into “excessively dependent” on short-term promotions and complicated multi-buys together with the favored “Dine In” deal which had decrease revenue margins. “We’ve already lowered the costs of over 100 on a regular basis strains with many extra to go,” he mentioned.
M&S has round 1,000 shops within the UK however Rowe mentioned the property was “older” than these of its opponents with quite a few legacy points that “urgently” wanted to be addressed. It has now shut 29 of the 100 shops recognized for closure with the quantity of gross sales transferring to close by shops seen to be encouraging.
“Studying by way of M&S’s half yr outcomes is like taking a chilly bathe,” mentioned Tom Stevenson, funding director at Constancy Private Investing’s share dealing service. “The corporate is ruthlessly sincere in regards to the large problem it faces …acknowledging that it has a mountain to climb in each clothes and meals, that its administration has been weak, its web site clunky and its shops old school.”
M&S’s headline pre-tax income had been up 2% at £223.5m which was forward of Metropolis expectations. The retailer additionally confirmed it could proceed to pay a dividend to shareholders.
Stevenson mentioned the half-year replace was according to expectations: “Gross sales are nonetheless declining which within the context of which flat income is just not a foul consequence. The excellent news is that the interim dividend was maintained.”