Marks & Spencer chief executive Steve Rowe today set out his vision of how stores and digital will work together in a “simpler, more relevant” and “sustainable” M&S in years to come.
The multichannel retailer says it will have around 60 fewer clothing and home stores but more Simply Food stores. Overall, it says, it will have more shops, but in them, the emphasis will be different. “In the future,” said Rowe, “we will have more inspiring stores in places where customers want to shop that complement our growing digital offer.”
This focus on developing “a sustainable business which will delight our customers” will also see the retailer pull out of ten loss-making international markets, with the closure of 53 wholly-owned stores and plan to develop franchise relationships instead. That reverses an international bricks-and-clicks strategy first set out by Marc Bolland in 2011. The changes mean history repeating itself: M&S first pulled out of Europe in 2001, closing around 40 stores. Today the retailer trades online in 21 markets through its own websites, through marketplaces such as Zalando in Europe, and Myntra in India, and through its own franchise partners. Digital now looks set to remain M&S’ only direct online channel.
“These are tough decisions,” said Rowe, “but vital to building a future M&S that is simpler, more relevant, multichannel and focused on delivering sustainable returns.”
The update came as M&S, a Leading trader in IRUK Top500 research, today posted group revenue of £4.99bn in the 26 weeks to October 1. That’s 0.9% ahead of the £4.95bn reported at the same time last year. Underlying pre-tax profits of £231.3m were 18.6% down on the £284m reported last year, but one-off costs of £206.2m, related primarily to changes to pay and pensions and to provisions against insurance misselling at M&S Bank, meant that at the bottom line pre-tax profits of £25.1m were 88.4% down on last year.
A constant currency analysis – which removes currency gains made through the weakness of sterling over the period – shows group sales were flat over the first half. Food sales grew by 4%, but fell by 0.9% on a like-for-like basis, which strips out the effect of store openings and closures. Clothing sales fell by 5.3% on a total basis, or 5.9% like-for-like, while M&S.com sales grew by 0.3%.
