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M&S restates online sales to account for £500m of returns

Marks & Spencer has revealed its online sales over the past four years were lower than thought, as it did not take into account £500m of goods returned to stores.

M&S began breaking out online sales in 2007, at which point a decision was made to report the figures on a pre-store returns basis. This year it decided to move to a post store-returns basis.

As a result, it has revised its online sales in the year to March 2014 down by £151m from £800m to £649m. Over the past four years, online sales were £500m less than previously stated.

The changes do not affect M&S’s overall sales or profits.

A spokeswoman for M&S said: “As it clearly sets out in our annual report, this year (2014/15) we took the decision to report the standalone M& number on a post store-returns basis and have restated the historic M& sales on a consistent basis to provide a comparative. We will continue to report M& on a post-store returns basis.”

It comes as research from retail analyst firm IHL Group, commissioned by software provider OrderDynamics, suggests retailers are losing out on an estimated £425bn per year because of returns.

Readers' comments (9)

  • It may not affect sales/profits.

    However what about management and staff bonuses? Not just overpaying digital team. Have stores incurred any of the cost of returns set against there own targets?

    What a mess.

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  • How many more companies do not discuss the returns they get and what happens to them??
    M&S have a lot to catch up up on when it comes to online shopping, so lets get the worst bits over and push onwards and upwards!!

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  • The trade tends to disregard returns to hype sales up or even worse, say that return s can be good for a business.

    M&S are like most other businesses online in that whatever the header figure is, when you factor in returns and other mechanicals, there isn't much to crow about.

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  • Here at Clear Returns we regularly see retailers assign the full upside to the online channel – revenue growth, record sales figures, stellar marketing conversion performance – yet barely factor in the extraordinary downside, in the form of high returns. They fail to account for the full online returns picture, so returns to the store and all the operation wide associated costs of returned do not get fully reconciled back to the online business.

    Returns from online are far higher than in the store. They can exceed 35% for UK women’s fashion. Some of these goods are returned by mail or Collect+ – thereby incurring two-way postage costs. But where the retailer has the store base, as half of online returns – or more – will get returned in store. The store returned goods rarely go straight back onto the shop floor – the store may not stock that range, the goods may need cleaning or repackaging, so they often require sending back to central warehouses to be processed which can take weeks.

    And it's worth remembering, that M&S’s £500million over the last four years doesn’t include the cost of marketing to acquire the sale that led to the return, it doesn’t include handling costs, it doesn’t include lost lifetime value from the customer finally fed up with having to return yet another order.

    Unlike M&S, Clear Returns customers can reconcile returns back to the original marketing activity. They can attribute refunds and returns costs to the correct channel. And they can make business decisions that grow retained revenue – thereby profits – across their whole business, rather than over-rewarding one channels performance at the cost of the whole business.

    Vicky Brock, CEO, Clear Returns

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  • Perhaps CEOs, CFOs & CIOs should be targeted on returns rates. I'm struggling to think of another industry that has such a flawed model.

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  • Hilarious?

    Hasn't Tesco recently taken on board a Finance Director... from M&S?

    Out of the frying pan...

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  • Failure to take into account the value of goods sold online but returned to stores is not good. But worse still is if a retailer (such as M&S) fails to analyse and then act upon the reasons for why goods sold online are returned – whether or not to store.

    The inexorable rise of online sales means that fashion retailers can steal a march on their competitors if they can (i) determine such reasons and (ii) act upon them.

    Stephen Sidkin
    Fashion Law Group
    Fox Williams LLP

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  • Think its called smoke and mirrors! now we are beginning to hear the truth, its not all wonderfull on the web especially when you can return it to the store/shop ask any retailer how they dread Monday morning!

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  • M & S surely turn some terrific figures online, as do most of the 'big boys' in the fashion trade; but at what cost? As a small retailer we concentrate our efforts on the instore experience and don't lose too much sleep over web sales. Having listened for many years to reps and agents on the wholesale supply side, who regularly talk to their customers, the truth seems to be that not many are able to return a reasonable profit on web sales, and very few like to admit what hard work it is. Forgive the pun but 'The Emperors New Clothes' jumps to mind!

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