Marks & Spencer is “on track” to deliver long-term sustainable growth, its bullish chief executive Steve Rowe insisted today, despite a fall in fashion sales and slump in overall profits.
“It was a year of considerable change,” Rowe said at a presentation of the full-year results, which revealed a 2.8% fall in clothing and home sales in the 52 weeks to 1 April. “We have been busy and remain on track with our plan to put our customers at the heart of the business.”
Rowe, who took over the CEO role just over a year ago, defended a series of “costly but necessary” decisions made during the past financial year, which hit the retailer’s bottom line. Over the past few months, M&S has been restructuring and streamlining its head office and reviewing its UK and international store portfolio, closing some loss-making stores and opening more branches of M&S Simply Food.
“Profits were down in line with expectations but we’re a stronger business now with a focus on a sustainable future for M&S,” argued Rowe. He added: ”We’ve made improvements, but there is more to do. We’re not complacent.”
Rowe said customers have reacted positively to improvements in the style, quality and fit of its clothing. Last week, M&S unveiled a “considered” autumn 17 collection featuring heritage fabrics and rich earthy colours, which put less emphasis on headline-grabbing hero pieces and focused on providing consistency and quality.
“We have more authority in our selection of easy-to-wear staples,” said Rowe. “We have focused on fabric, fit and finish. We have extended our fit on certain ranges, including bras and men’s tailoring. This is underpinned by quality.”
The retailer has reduced the prices of 2,400 lines, and like-for-like prices across fashion are down 18% on last year. M&S also held three fewer Sales during the period. Another two will be cut this year, bring the total down to four per year.
Rowe said Jill McDonald, his surprise hire for the new managing director of clothing, home and beauty role, will help to improve fashion sales going forward.
“Jill has been brought in to run a big business. She is managing director. That role is not about picking knitwear – we don’t need another buyer. It’s about running buying teams, sourcing, logistics and sales. Most importantly, she has a great track record of keeping the customer at the heart of what she does.”
Profit before tax at M&S was down 63.5% on the year before. Its adjusted profit before tax – taking out one-off costs such as changes to its pay and pensions, the restructuring of its UK head office and a review of its UK and international store estate – fell 10.3%.
Group revenue was up 2.2%. However, clothing and home sales fell 2.8% as a result of the reduction in the number of promotions and clearance Sales during the year. Like-for-like sales in this division were down 3.4%.