Marks & Spencer says its ‘never the same again’ transformation is on track as its sales continues to shift online while recovering in-store – and as it raises its profit expectations for the year.
The food, clothing and homewares retailer, ranked Elite in RXUK Top500 research, says its sales are recovering across categories as online sales grow strongly while its stores are now able to trade fully once more.
M&S said in a trading update today that group sales were up by 29.1% in the 19 weeks to August 14 , compared to the same time last year, and by 4.4% compared to the same period in pre-pandemic 2019. Clothing and home sales are 92.2% up on last year, and down by 2.6% on 2019, with online sales up by 22.2% on last year, and by 61.8% on 2019. More than a third (35%) of clothing and home sales took place online during the period. In-store sales are 177.5% up on last year, but 19.8% down on 2019. The retailer points to changes including a move away from promotions and a “substantially smaller” summer sale, as well as more focused clothing and home ranges.
Food sales are 10.8% up on last year and 9.6% up on 2019, while international sales have grown strongly compared to last year (+39.7%), but are behind 2019 (-5.2%). M&S recently announced that it is to sell its food ranges in 150 new markets through the British Corner Shop website that sells to expats. Online international sales are running about 40% up on last year and are more than double the levels of 2019.
M&S says in today’s statement: “The pivot to online has continued with store sales 19.8% down on 2019/20 as many locations remain in slow recovery from the pandemic, although retail parks have outperformed.” It also says that both its guest brands and Sparks loyalty programme are performing well.
It adds: “Although there has likely been an element of pent-up consumer demand in trading to date, we believe this performance provides strong confirmation of the beneficial effects of the last 18 months’ ‘never the same again’ changes. Despite this there remains substantial uncertainty as to the continued strength of consumer demand, as well as disruption in both supply chains and consequent pressures on costs and margin.
“However, assuming no further Covid-related restrictions on trading at this early stage we expect adjusted profit before tax for the year to be above the upper end of previous guidance of £300-£350m.”
Commenting, Emily Salter, senior retail analyst at GlobalData, says: “If M&S continues on this track to put online first and works hard to remain relevant to shoppers, it could well have turned a corner in both its recovery from Covid-19 and long-term prospects.”
She says its clothing and home division has made a “decent recovery” from Covid-19, but should now focus on making its in-store clothing offer more inspiring. “It boasts that 14% of customers who purchase Nobody’s Child are new to M&S womenswear, so why not offer this brand in-store to provide a more compelling reason to visit,” she says. “The focus on new brands must not be at the expense of its own brand products though, as M&S has hot competition in the form of Next and ASOS in selling third-party brands.”