Marks & Spencer CEO Steve Rowe has insisted there are “green shoots” in the business’ transformation plans, despite the retailer reporting a 9.9% drop in profit before tax and adjusting items for the year to 30 March 2019.
Profit before tax fell to £523.2m for the period, and group revenues also dropped – down 3% to £10.37bn for the year.
UK clothing and home revenues fell by 3.6% overall and 1.6% on a like-for-like basis. Online clothing and home revenue grew by 9.8%. In total 22% of clothing and home UK revenue now comes from online, up from 19% last year.
An overly large and confusing offer, supply chain issues and poor availability of popular styles were in part blamed for the disappointing performance of the sector.
However, gross margins on clothing rose by 20 basis points, as a result of 14% less stock going into Sale. For the year ahead, M&S expects to reduce options and duplications in styles, and focus more on fashion and trends in its designs. It will also shift to a “first price, right price” structure.
While stressing that the M&S transformation was making “good progress” Rowe conceded that the business had not been consistent: “M&S is changing faster than at any time in my career – substantial changes across the business to our processes, ranges and operations – and this has constrained this year’s performance, particularly in clothing and home.”
Rowe also said the retailer was focusing on “restoring the basics” and fixing legacy issues as a first stage in its transformation: “The objective of our transformation programme is to create a profitable, growing family of businesses under the M&S brand within three to five years, bound together not only by a common consumer brand but also by shared sites, employment values, technology and customer data”