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M&S sales hit by British retailer's latest reinvention

Reuters  |  LONDON 

By James Davey

LONDON (Reuters) - Sales at fell in the first half of its financial year, with demand for clothing and hit by disruption from the latest attempt to reinvent Britain's most

After more than a decade of failed turnaround programmes, is now targeting sustainable, profitable growth in three to five years by shutting less successful stores. It warned on Wednesday that sales were unlikely to improve soon.

"Trading conditions remain challenging and the headwinds from the growth of and the march of the discounters remain strong in all our markets," it said.

Shares in M&S, which have fallen 4 percent so far this year, were down 2.2 percent at 0900 GMT.

launched its latest turnaround plan last November, two months after joined as to work alongside Steve Rowe, a company lifer.

Like other established retailers, is trying to deal with the shift of clothing 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 trends have also hampered efforts to revive its business.

Results on Wednesday showed that its previously reliable business was particularly weak, with like-for-like sales down 2.9 percent -- below expectations of a 2 percent fall and reflecting the need for price cuts.

Gross margin in the division fell 25 basis points.

Sales in its clothing and home division -- long the nation's first port of call for school uniforms, interview suits and underwear -- fell 1.1 percent on a like-for-like basis while its gross margin was down 20 basis points.

"Against the background of profound structural change in our industry, we are leaving no stone unturned and reshaping our business, its organisation and culture," said Rowe.

LOOKING JADED

The group said its full-year outlook was broadly unchanged and it maintained its interim dividend however as cost cuts helped underlying profit to rise by 2 percent to 223.5 million pounds ($293 million) in the six months to Sept. 29, ahead of analysts' average forecast of 203 million pounds.

Laith Khalaf, at Hargreaves Lansdown, said the broad direction of travel at M&S would not come as a shock to anyone, although he noted that the business looked particularly jaded.

M&S has previously attracted more affluent shoppers who pick up meal deals and wine on their way home. Khalaf said that approach was now facing competition from such as Hello Fresh, and

"These providers present a particular threat to M&S seeing as many of its customers are buying a quick meal for that night, rather than a full weekly shop," he said.

The latest M&S five-year programme of store closures and relocations aims to cut excess selling space in its clothing business; increased and includes moves to make the misfiring food business more competitive.

M&S is targeting 100 British store closures by 2022, as it strives to make at least a third of clothing and It has said it could close even more as it manages its property estate more pro-actively.

($1 = 0.7622 pounds)

(Reporting by James Davey; Editing by Alexander Smith and Keith Weir)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Wed, November 07 2018. 14:47 IST
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