Further redundancies have been made at M&S suppliers as the retailer moves closer to its goal of directly sourcing 60% of its clothing, industry sources have told Drapers.
M&S is expected to reveal a gross margin improvement of between 150 and 200 basis points in its full year results tomorrow (May 20), as the decision to consolidate its sourcing, announced in May 2014, begins to bear fruit.
However, Drapers has learned that, partly as a result of the changes, one of M&S’s biggest suppliers Courtaulds is undergoing a “restructuring programme”, which will be completed by the end of June. Sources have also indicated that two other M&S suppliers, London-based Low Profile and tailoring supplier Bagir, have made redundancies.
One industry insider said: “It’s the backlash from M&S’s decision to move to direct sourcing. We saw the first wave of it last year, but suppliers are starting to feel it more now.”
Brothers Mark and Neal Lindsey were appointed as sourcing directors for general merchandise at M&S in March 2014. Both were previously responsible for the growth of Next Sourcing, which streamlined Next’s supply chain to improve speed and efficiency.
One third party supplier told Drapers: “Part of the Lindsey brothers’ strategy is displacement of suppliers and new ones come at the cost of the old. The more they work their magic over sourcing at M&S, the more the more traditional suppliers will be hit.”
Another supply source explained: “The old traditional supply base needed to be looked at in order for M&S to improve design, fashionability and margin. They are now working directly with factories to make them more efficient.”
As reported by Drapers in July last year, 80 redundancies were made at Dewhirst after M&S outsourced some of its manufacturing to Bangladesh. It is thought The Fielding Group was also affected.
M&S reported a 1.2% increase in fashion sales for the 13 weeks to March 28, breaking a cycle of 14 consecutive quarters in decline. The improvement, which saw like-for-like fashion sales edging up by 0.6%, was credited to better “product quality and styling”.
Low Profile and Bagir did not respond to requests for a comment.