British retailer Marks & Spencer posted adjusted pre-tax profits of £428m for the year, as its turnaround strategy pays off.
British retailer Marks & Spencer posted adjusted pre-tax profits of £482m in the year to April 1, better than expectations of £431m, as its turnaround strategy appears to be paying off.
Sales rose 9.6% to £11.9bn for the year, boosted by strong performances in food and clothing. Food sales rose by 8.7% to £7.2bn, whilst clothing and home sales grew 11.5% to £3.7bn, beating analyst forecasts.
However, adjusted pre-tax profits were less than the £522m figure from last year, due to the loss of government business rates relief, a hangover from the pandemic. As well as continued cost inflation hampering margins in clothing and food.
Despite an uncertain outlook for consumer spending this year, M&S chief executive Stuart Machin said the performance was evidence of progress in its turnaround plan, which has included overhauling its store portfolio, shutting some stores and repositioning others to key city locations. A strategy which has included looking at ‘the right stores, in the right place, with the right space.’
This week, the retailer opened its new M&S store in Leeds’ White Rose shopping centre, which at 96,600 sf ft is a flagship for the North and the first iteration of the retailer’s new look in the region.
But as with many businesses, labour costs and energy are expected to bite into profits this year. With the retailer anticipating £50m of energy cost rises and £100m in staff pay increases this year, which it aims to offset with a cost-cutting plan in other areas.
HOW TO ACHIEVE A SUCCESSFUL TURNAROUND
We take a closer look at 5 ways businesses can achieve a successful turnaround strategy:
1. Cost reduction and efficiency
A turnaround strategy typically involves implementing various measures to reverse declining performance and improve the financial position. Creating efficiency through streamlining processes, optimising the supply chain, renegotiating contracts, and eliminating unnecessary expenses are good places to start.
2. Product portfolio and brand repositioning
Analysing and adjusting the product portfolio to align with changing consumer preferences and market trends is key. This may involve revamping existing products, introducing new offerings, or repositioning the brand to appeal to the target market.
3. Talent management and organisational restructuring
Improving talent management practices and aligning the workforce with the company’s strategic goals can contribute to a successful turnaround. This may involve downsizing, reassigning roles, or hiring new talent with relevant expertise.
4. Store optimisation
Assessing the store network or head office buildings and making necessary changes is an essential part of any turnaround strategy. This may involve closing underperforming stores, relocating head offices, renovating existing ones, or expanding into new markets or locations with growth potential.
5. Customer-centric approach
Focusing on improving the customer experience is vital in today’s challenging market conditions. Invest in market research to understand your customer needs and preferences better, enhance customer service, and leverage technology to provide a seamless consumer shopping or B2B experience
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