Marks & Spencer chief executive Marc Bolland has admitted its clothing and general merchandise sales for the year to March 31 were “not good enough”, but vowed to continue the turnaround seen in the fourth quarter.
Underlying pre-tax profit rose 6.1% to £661.2m for the year, but clothing and general merchandise sales fell 2.5%. Like-for-likes were down 3.1%.
Bolland said: “Our [general merchandise] sales were not good enough, but we are pleased with the fourth quarter and have improved our quality, style and in-store presentation. We know where we are going and we have taken a step in the right direction.”
He said M&S had invested in infrastructure over the last three years rather than delivering “huge profits”.
“We needed to build infrastructure to launch the business forward. I didn’t want to kick these things into the long grass just so I could add another £40m or £50m of profits. I wanted to do it right, not just look better,” he explained.
One of the core focuses for M&S was improving its gross margin, which improved by 190 basis points during the year thanks to “significant sourcing gains” and is expected to increase by a further 150 to 200 basis points in the next 12 months.
Many have credited brothers Mark and Neal Lindsey, who joined the business as sourcing directors for general merchandise in March 2014, for the success, but Bolland was adamant it was a “team effort”.
“The Lindseys are strong talents and that’s why we employed them, but it’s a combination of them and our in-house team. They are not working in isolation. They have a team of 400 people working on sourcing across the globe to find the right suppliers, at the right quality, at the right price.”
M&S currently sources 35% of its product directly and is on track to ramp that up to 60% of all clothing production by 2017.
This week it was revealed that M&S will launch a capsule womenswear collection called Limited London, which is made from recycled fabrics including cotton and polyester, next month. It will be available in selected stores and online from June 1.
Drapers understands the retailer is also reviewing its men’s formalwear brand Collezione and could pull it out of stores.