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Marks & Spencer unveils 23.4% rise in online sales as it takes action to boost falling profits

Image courtesy of M&S

Marks & Spencer this week unveiled a 23.4% rise in online sales, after a year in which a record 7.4m customers clicked to buy. But ecommerce growth came as overall sales showed more modest growth, and pre-tax profits fell by a fifth – and chief executive Steve Rowe responded today by setting out a plan to improve sales and profitability.

The clothing to homewares and food retailer, which sells online and through stores in the UK and Europe, said that mobile continued to be its fastest-growing sales channel, while shoppers increasingly use more than one device when they buy. But while online sales grew by 23.4% over the year, growth slowed to 8.2% in the fourth quarter, contrasting sharply with first-quarter growth of 38.7%.

That’s a slowing in online sales that M&S, a Leading retailer in IRUKTop500 research, acknowledged in its full-year results statement. “We are operating in difficult and challenging times – consumer confidence has dipped, the clothing market is flat, online sales have slowed and there’s deflation in the food market,” it said. “Our customers are changing too as they become increasingly style and healthy conscious, shop around and expect more.

“Analysing the shopping habits and behaviours of the 32m customers who shop with us has shown that they carry a deep-rooted affection for M&S but, for some, M&S is no longer their first choice.” The retailer said that by listening to its shoppers it had found common themes and insights that now form the basis of plans that aim to make “every moment special for our customers”. That will include putting customers at the heart of M&S, while also taking action to improve clothing and home sales, improving products and the customer experience while cutting prices, and growing food sales through measures including building convenience.

Chief executive Steve Rowe warned that taking action by increasing staffing and reducing prices would impact short-term profits. He added: “We are, however, confident that our commitment to delivering the right product, price and service will help return clothing and home sales to growth.”

The update came as M&S reported group revenue of £10.4bn in the year to March 26 (and £10.5bn in the 53 weeks to April 2), of which £9.3bn (£9.5bn, 53 weeks) came from the UK market and £1bn (£1bn, 53 weeks) from international sales. Across the group, revenues were 0.8% up in the year: UK sales in the year were up by 1.1%, but international sales were down by 2%. Pre-tax profits of £483.3m were down by 19.5% (£488.8m, 53 weeks, -18.5%).

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