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M&S sets out turnaround strategy after full-year clothing sales fall

Clothing and homeware sales at Marks & Spencer fell by 2.9% on a like-for-like basis for the 53 weeks to April 2, compared to the year before, as the retailer “underperformed the market and lost market share”.

M&S blamed “challenging trading conditions” due to unseasonal weather, particularly in the autumn, which led to high levels of promotion. Total sales in the general merchandise division were down 2.2%.

Across the business, including the food division, sales were up 2.4% to £10.6bn. Underlying profit before tax was up 4.3% to £689.6m, however, profit before tax fell 18.5% to £488.8m and M&S warned its turnaround plan could further dent profits in the short term.

M&S clothing has seen like-for-like sales decline in all but one of the last 18 quarters.

New chief executive Steve Rowe said the clothing performance was “unsatisfactory” and outlined his initial turnaround plans.

Going forward M&S wants to “re-establish its style authority” by focusing on product, quality and fit, it is going to lower prices and reduce its promotions. It is also going to sharpen ranges, improve availability and invest in store staffing.

As previously reported by Drapers, initial changes to M&S’s management structure, board responsibilities and buying strategy under Rowe were largely welcomed as a good “first step” towards reviving its flagging fashion division.

The retailer said the customer is at the heart of its new strategy, which will enable speedier decision making and a “more confident and coherent” fashion offer.

Rowe revealed a new, slimmed down management structure earlier this month – resulting in the departure of a number of senior staff. The autumn 16 range, which will be merchandised by outfit rather than brand, was well received by the fashion press.

M&S is also establishing a new operating committee, which will be accountable for the day-to-day running of the business, as well as for the development and execution of strategy.

Rowe said: “We are clear on the actions needed to recover and grow clothing and home, which is our top priority. We are investing to re-establish our price position by sharpening prices and to enhance service by putting more employees into our stores.

“These actions, combined with the difficult trading conditions, will have an adverse effect on profit in the short term. We are, however, confident that our commitment to delivering the right product, price and service will help return clothing and home sales to growth. This, together with continued momentum in food, will provide us with a solid base from which to build a long term sustainable business.”

 

 

Readers' comments (4)

  • The suede skirt was also 'received well' by the fashion press.

    It's the customer receipt that matters!

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  • They need to start selling what the Marks and Spencer Wants

    And in the Men's department its not slim fit formal shirts

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  • We have heard this all before. The 2 most important things for any retailer to focus on are the customer and product. If you lose sight of one or both your business will fail. Steve, you product offering is confusing, too many brands all doing the same thing, product handwriting not hitting the mark and yes you are expensive, First Price Right Price will help manage discounting. Weather is nothing new in the UK - unpredictable, it is an island after all ! You need fresh eyes in the buying teams to revive the products.

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  • Once they realise who their customer is they will get it right. It's people of a more senior nature-always was. As well as other people buying basics.
    They don't need loads of fitted shirts or cropped tops-those customers don't really shop there.
    Once they realise this they will be fine-but I still don't think they do.
    Changing CEOs and buyers every five minutes won't solve this unless they address this fact.
    Until they do we will hear the same stories every time their results come out.
    Not exactly rocket science to solve this one.

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