20 May 2014 - 10:02am | posted by | 1 comment

Marks & Spencer reports third consecutive fall in profits, but cites 'solid progress' with new website, increasing web traffic and refreshed womenswear departments

Marks & Spencer revealed its 'leading ladies' earlier in the yearMarks & Spencer revealed its 'leading ladies' earlier in the year

High street chain Marks & Spencer has reported a fall in profits for the third consecutive year, according to its latest round of financial figures released today.

The results show a 3.9 per cent fall in underlying annual profit to £623m, like-for-like food sales rose 1.7 per cent, whilst the brand’s general merchandise – including clothing – fell 1.4 per cent.

Marks & Spencer chief executive, Marc Bolland, said the brand was “focused on improving our performance in general merchandise” and reported he was “pleased” by “early signs of improvement”.

Bolland added: “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 focussed on delivery.”

“Unseasonal conditions” and “high levels of promotional activity” were given as factors for the fall in general merchandise profits, though a return to growth in the category in the final three months of the year was highlighted as a positive.

“Refreshed” womenswear departments in 70 of Marks & Spencer’s “top stores” and the introduction of “new look destination departments” are hoped to continue this growth moving forward.

Of its new online shopping destination M&S.com the brand said it expected a settling in period of around “four to six months” as it would “take time for customers to migrate and get used to the site”. Marks & Spencer revealed that over half (55 per cent) of multi-channel orders are now collected in store or ordered in-store for home delivery.

International business was up 6.2 per cent to £1.15bn with 55 new stores opened in the last year, seeing the brand now trading from 455 stores across 54 territories.

Chairman Robert Swannell commented: “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.”

M&S.com results saw sales up 22.8 per cent with site visits increasing by nine per cent. Online business accounted for 16 per cent of general merchandise sales, an increase of three per cent from last year. Mobile sales are up 90 per cent with tablet traffic doubling and now accounting for a quarter (25 per cent) of online sales.

Comments

21 May 2014 - 12:42
jofletcher's picture

It's not surprising that profits are down as the battle over clothing hasn't been won - do M&S really know who their customer is anymore and what her life is about? There is some great product but finding it requires real determination and a woman who is prepared to spend - with leather jackets at over £200 and the Vogue featured beach cover up at £35 it's a leap of faith that's needed and a full purse.

Principally where M&S is falling down is shopping experience. It's broad target shopper base and substantial SKU count means, while there is something for everyone in-store – or indeed online – finding what's right for you can still be a challenge. Searches online or using in-store terminals lack personalisation, too often returning an overwhelming number of search results. In-store, particularly in larger stores, shopping across sub-brands can be a frustrating experience, with shoppers often expected to navigate multiple floors with little guidance in their quest to find the perfect outfit.

M&S was also late to join the multichannel party. Granted, the retailer has been trading online successfully for many years, but it has only recently taken complete control of its dot com platform. As a result it has made relatively small steps forward while the likes of John Lewis and Next have leaped forward, forging themselves as multichannel leaders.

This is important because getting multichannel right could be the solution M&S needs. In an increasingly joined up world in which people are constantly connected, shoppers can browse ranges wherever they are, they can access product information in-store and can share ideas and inspiration with friends. Executed correctly, smartphones have the potential to enrich the shopping experience, bring the right product to the right people, help shoppers find what they're looking for and ultimately allow M&S to have a flourishing multichannel business that drives footfall to stores.

The success of M&S is ultimately determined by the performance of its womenswear business. Getting the product right solves part of the problem. Improving the shopper experience will help regain its rightful place in the hearts of the British public.

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