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M&S reports online sales up by a third

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Marks & Spencer today reported a 34.2% rise in online sales, belying slow overall sales growth and a 20% fall in profits.

The improvement in sales on M& was accompanied, said the multichannel food-to-fashion stalwart of the UK high street, by “strong improvement across all metrics”. It marks a return to form following a replatforming in February 2014 that met with initial customer resistance was followed by almost a year of falling online sales.

But it came as the trader, an Elite retailer in the IRUK500, today reported group revenue of £4.9bn in the 26 weeks to September 26, 1% ahead of the same time last year. UK sales of £4.4bn were 1.7% up on last time, while international sales of £506.6m were 5.1% down. Pre-tax profits of £216m were 22.7% down on last time, although underlying profit before tax was 6.1% up on last time, at £284.0m before a net charge of £68m.

Online, however, M&S said it saw the fruition of investment in infrastructure and capabilities in recent years. “We outperformed the market, with all customer measures in growth,” it said in the statement. “Traffic increased by c. 20%, with mobile and tablet growth accelerating as customers increasingly choose to shop this way.”

A new mobile website launched during the period saw sales rise by 83%. M&S also said that 1.8m members had signed up for its Sparks loyalty programme in the first two weeks since launch. And 60% of customers using its multichannel Shop your Way service chose to collect their orders from store, the retailer said.

UK general merchandise sales, contrasting with the fast online growth, were down by 0.4%, while like-for-like sales were down by 1.2% – a fact put down to “unseasonal conditions” that led to discounting, and a decision to focus on full-price sales.

“Our food business again outperformed the market by over 3% points as our focus on quality and innovation continues to set us apart,” said Marc Bolland, chief executive. “In general merchandise we decided to improve profitability by focusing on gross margin, delivering another significant increase, which in part resulted in slightly lower sales. As a consequence of good performance and strong cash generation we have decided to increase our dividend.”

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