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'Drastic changes' needed to sort out M&S fashion, say analysts

Following today’s news that like-for-like general merchandising sales at Marks & Spencer dropped 2.7% for the 13 weeks to March 26, Drapers rounds up the reaction from retail analysts.

Honor Westnedge, lead analyst at Verdict Retail, said: “Margin improvement continues to be the headline in clothing and home, with better buying margins and investment in price, when actually M&S must start to deliver sales growth to recoup lost market share and improve competitiveness against strengthening rivals. Clothing sales continue to decline, despite years of investment, focus, management reshuffles, rebranding and brand rationalisation. Steve Rowe has his work cut out to restore consumer confidence in its womenswear offer and acquire new shoppers to the M&S brand – something Bolland tried fearlessly to achieve but with minimal results.”

James McGregor, partner at retail consultants Retail Remedy, said: “We have a good feeling about Rowe; he has spent time in stores, has delivered food success and has started his first week in the best possible place, in stores with colleagues and customers. A review of the M&S target customer is overdue, the customer that visits the food hall has disposable income, is already frequently visiting stores and can easily and inexpensively be acquired and converted with the right ranges. We can expect Steve Rowe to ’kitchen sink’ the M&S full year results in May, leaving him with a clean sheet with which to start his tenure as CEO.”

Julie Palmer, partner at turnaround specialist Begbies Traynor, said: “This latest poor performance from Marks & Spencer’s general merchandising business comes as no surprise to the City, since the clothing division has only managed to increase like-for-like sales in one out of the past 16 quarters. While the latest figures are an improvement on the retailer’s dire Christmas trading period, drastic changes are still needed to boost margins and encourage consumers back onto the shop floor. Clearly incoming CEO Steve Rowe has an uphill battle ahead of him. Ultimately Marks & Spencer needs to reposition itself in the hearts and minds of UK consumers as while everybody still loves M&S, nobody seems to be ‘in love’ with it anymore.”

Ernesto Bisagno, vice president and senior analyst at Moody’s, said: “M&S’s Q4 trading statement points to some improvements in the general merchandise business versus a very weak Q3, although organic sales from the division remain negative at 2.7%, including the contribution of M&S.com which was up 8.2%. Although we expect additional margin improvements in 2016-17, operating performance could be negatively impacted by weaker trends in consumption on clothing and footwear.”

Jon Copestake, retail analyst at the Economist Intelligence Unit, said: “With M&S it’s a case of new CEO but same old story. Steve Rowe’s appointment has done little to arrest the clothing declines that have seen just one quarter of like for like growth in the clothing and home department in the last five years. Equally the talk of a new strategic emphasis on clothing from Mr Rowe has an element of deja vu about it as well. It feels that M&S have rarely issued a financial announcement without making similar claims, evidenced by the merry-go-round of designers and clothing chiefs that the retailer has appointed.”

Readers' comments (3)

  • Now that Amazon is about to focus on fashion, it's going to get dramatically worse.

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  • M&S is a busted flush. It's a British Leyland living in a Range Rover world.

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  • Drastic change has been needed for over a decade, this is not news. I do not honestly understand what the issue really is with getting M&S on track. Too many cooks? As a supplier it's obvious that the only brands that are doing well are those confident of their own handwriting, customer and appeal.

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