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Multichannel growth of 23% drives M&S sales

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Marks & Spencer today reported multichannel sales up by 22.8% over the last year, helping to drive overall growth of 2.7% in group sales to £10.3bn.

Pre-tax profits at the general merchandise and food retailer grew by 6.1% to £580m in the year to March 29, but underlying earnings were down at £623m, down by 3.9% compared to the same time last year. Total UK sales rose by 2.3%, with food sales up by 4.2% but general merchandise sales flat. On a like-for-like basis, UK sales were up by 0.2%, with food sales up by 1.7% and general merchandise sales down by 1.4%.

M&S’ online business now accounts for 16% of general merchandise sales, compared to 13% at the same time last year. Site visits were up by 9% over the course of the year. But M&S’ figures emphasised the multichannel nature of its ecommerce sales: some 55% of online purchases over the year involved the store, being either picked up in store or ordered in store for home delivery.

M-commerce also came to the fore over the year, with sales over the devices up by more than 90%. Sales from tablet computers doubled to account for 25% of online sales, up from 15% last time.

M&S said its new web platform, launched in February with an emphasis on up-to-date stock availability, imagery, search and the capacity for continuous improvement, would take up to six months to settle down.

“We are managing this large transition carefully since we expected it would take time for our customers to migrate and get used to the site as well as for it to settle down technically,” said the statement. “We have migrated 2.5m customers, processed over three million orders and made hundreds of optimisations to website journeys.”

The retailer’s Castle Donington ecommerce and national distribution centre, opened last May, now fulfils around 90% of ecommerce orders, and handles about two million singles a week. “Activity at the site will continue to ramp up ahead of the peak trading season enabling us to make further improvements to our delivery proposition,” the statement said.

Chief executive Marc Bolland said: “Three years ago, we recognised the scale of investment required to transform our business, investing to strengthen our foundations and improve our customer offer. We are making solid progress on this journey and are now focused on delivery.”

The company said capital expenditure was expected to fall to £500m, from £550m, in the year ahead, and that it had decided not to go ahead with a London Gateway distribution centre, relying instead on Castle Donington and Bradford nationally, supported by four regional distribution centres which will be converted to serve the whole of the UK.

International sales rose by 6.2%, with 55 new international stores opened during the period, taking M&S’ total store numbers to 455 across 54 territories. Growth was particularly strong in India and at M&S’ flagship Chinese stores. Sales in Asia were up by 15.7% while those in Europe were up by 3.9%.

On food, company said it would not join “the race to the bottom on price,” but would focus on quality and innovation, “developing top-quality ranges that are competitively priced, while ensuring our farmers get a fair deal too.”

Chairman Robert Swannell said: “The investment made in executing our strategy over the last three years puts M&S in a stronger position to compete in a retail world undergoing profound change. Our priorities now are to deliver on the investment we have made and to make M&S a more profitable, stronger and well-equipped business.”

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