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M&S: ‘Significant further change required’ as sales fall

7:28 am, 7th November 2018

The retailer said that while its adjusted pre-tax profit for the six months to 29 September rose 2% to £223.5m – ahead of market expectations – clothing & home revenues were down 1.1% on a like-for-like basis.

Total revenue for that division – which has struggled for years – was down 2.7%. M&S said that reflected the impact of its store closure programme, which will see 100 sites shut by 2022.

Like-for-like food revenue fell 2.9% “reflecting tough trading”, the chain admitted. It also pointed to a reduction in promotion activity and the timing of Easter.

It updated investors on its progress as the wider high street battles the challenge posed by rising operating costs and weaker consumer spending amid uncertainty over the outcome of Brexit negotiations.

M&S, which saw rival House of Fraser join the casualties of the squeeze, said business conditions “remained challenging”.

It warned that it did not expect much improvement in sales in the near future – pointing to additional headwinds from “the growth of online competition and the march of the discounters”.

M&S said it was still getting to grips with improving the basics of its online channels – which it has previously said is a top priority.

It has placed struggling physical stores in the firing line and chief executive Steve Rowe admitted there were more changes to come if M&S was to achieve its aims.

He said: “We are on track to restructure our store portfolio with over 100 full-line closures and expect to see newly remodelled stores open next year.

“We are fixing the basics of our 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.”

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