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M&S posts best non-food sales in 4 years – but how long can it last?

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An “iconic suede skirt” and a “record Valentine’s Day” helped Marks and Spencer’s non-food sales performance reach the highest heights in 15 quarters last quarter.

 

Today the British retailer recorded the growth in ‘general merchandise’, a division largely focused on clothing and what M&S was once renowned for until those food adverts began to make apparel a lesser obvious product category the company was affiliated with.

 

Food business outperformed the market and M&S cited that the new ‘Simply Food’ stores are doing well, but this comes as no surprise. It’s the like for like growth of 0.7% for the three months to March 28 that has raised eyebrows. Although a small improvement, the rise is a prominent achievement after the retailer’s past two and a half years, under Chief Exec Marc Bolland’s leadership, have had a shadow cast over them.

 

The plc company, in line with its plan for the year, said it promoted less and focused more on full price sales although this was partly off-set by more stock going into the Christmas sale as a result of the unseasonal conditions through the Autumn/Winter season – a factor that affected several retailers including Next.

 

Macro-economic issues, particularly in Russia, Ukraine and the retailer’s Turkey franchise partnership, coupled with further weakening in the Euro, significantly impacted International second half profit although in a statement, Marks and Spencer said “key priority markets such as India continue to perform well”. It also cited that M&S.com sales returned to growth as planned, with the website metrics including traffic, conversion and customer satisfaction continuing to improve and the new distribution centre at Castle Donington performing well during the quarter.

 

But the retailer, founded in Leeds, has no time for resting on its laurels.

 

“Last year this venerable brand came perilously close to becoming an also-ran,” comments Paul Thomas, Retail Consultant at Retail Remedy, “modest though it is, M&S’s turnaround shows it’s not ready to be put out to pasture yet. For a while its hugely successful food range ceased to be a trump card - and began to look like the only card Marc Bolland had left to play but after a disappointing Christmas, this year the largest part of the business - women’s clothing - has finally begun to make progress.

 

A 0.6% like-for-like increase in clothing sales over the quarter will hardly set pulses racing, but as evidence that the brand’s core business has ceased misfiring this modest number is worth its weight in gold for Marc Bolland” he adds. “He still has a mountain to climb. Look beyond the flagship locations and many M&S stores are still a mess of baffling sub-brands. The re-launched website fails to inspire, and the brand’s ill-starred new distribution centre is still suffering teething problems.

 

However Bolland’s cost-cutting and investment plans are showing signs of bearing fruit. Dealing with the brand’s legacy problems will take much longer - but the return to growth after such a long decline will give him the breathing space he needs to drive through more changes.

 

The voices questioning whether M&S can continue to sell only its own brand clothing won’t have been silenced, but these results at least hint that M&S is returning to what it should be - a clothing retailer with a successful sideline in food, rather than a successful food retailer with a moribund clothing business holding it back.”

Published on Thursday 02 April by Veebs Sabharwal
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