The M&S food business has made a “good start” to the new financial year despite experiencing a slight setback the year before, according to M&S boss Stuart Machin.
The chief executive told investors on Tuesday that the company’s food margin took a 130 basis points hit in the year to 1 April as it decided not to pass on the full impact of cost inflation.
“That has given us a good start by the way into this year,” he said at the retailer’s virtual AGM.
However, Machin warned that food prices won’t come down as quickly as they went up.
“I’m slightly worried about deflation, because it’s not going to come down as quick as the inflation,” he said.
“Now we’re tracking that really carefully and trying to pass that on as well to customers.”
Subscribe to Retail Gazette for free
Sign up here to get the latest news straight into your inbox each morning
He added what while “inflation was a big challenge, the second very close challenge was the B word [Brexit]”.
“We don’t like to mention it as we have all moved on, but it added considerable amount of complexity, cost and distraction and we are still trying to find the way through.”
M&S chairman Archie Norman added that its Republic of Ireland business is now only “break even” due to the increased customs and border controls.
He added that the retailer’s international expansion plans do not include Europe as it is too expensive and complex to export fresh food: “We cannot legally send some of our products into the EU.”
Elsewhere in the business, Machin told investors that the group’s older cafés “don’t make any money” but have been kept as shoppers enjoy visiting them.
He said digital ordering systems had been introduced at newer cafés to improve cost efficiency.
M&S was criticised earlier this week for holding its fully digital AGM for the fourth year in a row, with investors complaining about not meeting the directors face to face.
However, Norman said the board could backtrack on the move: “[We have] heard the feedback and we are thinking about it”.
“The question now, which the board is going to have to think about given the feedback we have had, is ‘Why can’t I come along physically and look the chairman eye to eye and buttonhole him?’,” he said, adding that he didn’t think the request was “unreasonable”.
The move to the digital-only format, introduced during the pandemic, was to boost participation at the meeting.
At the time, Norman said AGMs resembled “antiquated events that are not accessible” for those who live outside of London or are limited on time.
Click here to sign up to Retail Gazette‘s free daily email newsletter
