In an unscheduled trading update, retailer M&S told investors that like-for-like food sales growth of over 11% and like-for-like Clothing & Home sales growth of 6% in the first 19 weeks of the year would deliver “significant improvement against previous expectations.”
The British retailer revealed that the first 19 weeks of the year had seen continued market share growth in both the Clothing & Home and Food businesses, and good progress on the programme to reshape M&S.
Like Asda, which posted a strong set of results this week based on low prices and value ranges, M&S has been investing in quality and trusted value, which has included sharpening prices on over 80 ‘Remarksable Value’ lines.
Clothing has been a thorn in the side for M&S in recent years. Struggling to maintain its mid-market positioning, staying fashionable and appealing to an older customer, it cut quality in an attempt to remain price competitive with discount fashion retailers. But in doing so, alienated much of its core customer base who came to M&S for quality, everyday essentials, such as underwear and jumpers.
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But the clothing turnaround plan, which has included introducing third-party brands and elevating own-brand ranges, is now reaping rewards. M&S said sell through rates have been robust and stock into sale was lower than planned.
Interestingly, it reported strong growth in stores, with more subdued growth online. This is a trend we’re seeing across the wider retailer industry, as the pandemic appears to have had little to no impact on the overall trajectory of online sales growth in the UK.
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Marks & Spencer said overall, group operating margin has continued to be robust, driven by strong store performance and enhanced by its store rotation and renewal programme.
This week, it opened the latest in its round of new store relocations, a 70,000 sq ft space in a former Debenhams retail unit at shopping centre, Liverpool One. The relocation is part of its strategy to create a store portfolio fit for the future.
Despite positive news on all fronts, M&S said there are still “considerable uncertainties about the economic outlook.” And it said there is a risk that the consumer market will tighten as the year progresses.
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