Total sales at M&S.com are up 12.5%, despite the retailer being forced to throttle its marketing activity to ensure a smooth transition from its old Amazon platform to the new site, the company reveals, as it outlines its Q1 results today.
With sales of clothes reversing several months of decline, the company also reveals plans to launch a new marketing campaign to promote its revamped site in May, which it believes should help to boost the rest of its general merchandise business. Around a third of its homeware sales are made via the website and these were hit by the lack of promotional activity online.
But that is not necessarily going to save the company. James McGregor, director of retail consultants, Retail Remedy believes that the retailer is in a precarious demographic position. “While M&S’s online presence is growing and strong, it doesn’t get away from the fact that the younger end of the market wouldn’t consider shopping for clothes in its stores, except perhaps for underwear,” he says. “To make matters worse, a large proportion of its estate is in secondary destination towns serving old people.M&S is setting out to become an international, multi-channel brand, and this is arguably its best hope”
But, wonders McGregor, is this a tacit admission that its dated bricks and mortar portfolio in the UK, with its ongoing clothing problems, will never again be the force it once was? “Only by creating a standalone clothing brand would M&S stand a chance of attracting the younger end of the market who are shopping with brands like Zara , House of Fraser and Next ,” he believes. “Relative to these other brands, it has lost a phenomenal amount of ground.”
And this is born out by the numbers revealed today. Total UK across all channels sales rose 1.5% in the 13 weeks to March 29, with like-for-like sales over the same period down 0.2%. Total group sales were up 1.9%, the company said. General merchandise sales were up 0.2%, and down 0.6% on an LFL basis. Clothing total sales rose 1.3%, gaining 0.6% LFL. Food total sales rose 2.5%, and 0.1% like-for-like.
The company says it expects full year gross margin in food to be slightly ahead of previous guidance. “As a result of a highly promotional market, we now expect the second half General Merchandise gross margin to be down, in line with the first half of the year. As a result, we expect the full year UK gross margin to be down around 20bps,” it said.
However, looking ahead – and despite some improvement in consumer confidence – the company remains cautious about the outlook. “Our focus is on continuing to transform Marks & Spencer into an international, multi-channel retailer,” it told analysts.
