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M&S turnaround will not be easy

After a second year of declining clothing sales, Marks & Spencer will have to work harder to dispel the gloom.

Sales at Marks & Spencer’s clothing division have fallen for the second year in a row - but has the business done enough to turn it around?

After the trumpet blasts of last week’s launch of its autumn 13 collection, management remained bullish in the face of what can only be described as more disappointing results on its clothing side. Total UK sales for the division fell 2.4% in the year to March 30, while like-for-likes dropped 4.1%. Underlying pre-tax profits plunged to £665.2m, its lowest point in eight years.

Yet management were broadly positive, describing its overall performance of a 1.3% rise in group sales as “strong” given the “challenging market”. Coming hot on the heels of its well-received preview last week no doubt gives the business’s top brass confidence. But with two years of declines to wipe out, the challenge of getting M&S back to its heyday where profits could break £1bn is even harder.

Chief executive Marc Bolland is already pushing back to spring 14 as a new mark in the sand and Verdict Research analyst Honor Westnedge agrees we might not see any improvement in M&S’s performance until early next year.

“A lot of people have said Marc has until September to see results, but that isn’t long enough - the new ranges will only have been in store for a month and a half. There is an awful lot riding on the range, high expectations from both the City and customers, but it could take a full year for customers to notice the difference,” she says. As the deadline of Bolland’s three-year strategy edges closer - he is in the second year - Westnedge says the task of getting M&S back on track is “very challenging”.

“M&S’s clothing arm has gone down rapidly in the past 12 months and given that it has been rolling out new shopfits and improving its online offer, it is a bit of a worry. The general market is tough but it has already had a year of strategy in place, so for the second year to be worse is a bad sign.”

One of M&S’s remaining challenges is in-store presentation. With the news, exclusively revealed on Drapersonline.com, that director of store environment and presentation Nayna McIntosh is leaving in August, that task is likely to get harder.

As it is, product density is a problem already. Neil Saunders, analyst at retail research firm Conlumino, says the average M&S coat style is available in 26 iterations, effectively different sizes. At Debenhams a shopper would find 11 different versions, while Next had 12.

Saunders’ research specifies outerwear, but he says it’s “true across most categories”. If left untackled it could be a major hurdle for M&S to leap in its bid to be associated with quality again. “It doesn’t give the impression of choice because the eye tends to see lots of the same thing, rather than lots of different options,” he adds.

“If M&S doesn’t address it, the changes it has made to quality will be lost in translation. You can’t treat a quality product like an everyday commodity.”

Bolland, however, has a different view. He told Drapers that density will remain relatively high because customers will complain if their size isn’t available.

“With 21 million customers, we will always be asked questions - if we didn’t have density, people would ask why we didn’t have all the sizes out,” he says.

“If you were to have no density, people would complain.”

But Drapers stores editor John Ryan agrees with Saunders that product density must be tackled: “If you are going to communicate quality, you need to communicate space. If that means slipping back and forth from the stockroom to get other sizes rather than having it out in store, so be it.”

Story
in
Numbers

-4.1%
General merchandising like-for-likes 2012/13
-1.8%
General merchandising like-for-likes 2011/12
8
Years Nayna McIntosh has
been at M&S
26
Items per rail on average, according to Conlumino

Readers' comments (1)

  • Just as well Marc's not a Premier League football manager...

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