M&S loses its spark as slumping clothing sales and food hall investment hit profits
Marks and Spencer is feeling the pinch with a slump in profits after embarking on an ambitious expansion of its grocery arm, opening 68 new food stores in the past year alone, as it seeks to diversify away from its struggling core clothing business.
Marks loses its spark as slumping clothing sales and food hall investment hits profits
This has led directly to a 60 per cent decline in pre-tax profits in the year to the end of March, with a pre-tax profit coming in at $176.4m with a 4.2% rise in food revenue failing to offset a steeper than expected 5.9% decline at its clothing and homeware division.
John Ibbotson, director of the retail consultancy Retail Vision, remarked: “M&S has run out of excuses. No amount of stammering about the mild winter or the weak Pound can mask the fact that these results are nothing less than awful.
“For years the brand’s successful food range provided a fig leaf that spared the blushes of its underperforming clothes ranges. No longer – stalling food sales and profit over the past year have revealed the full, naked weakness of the brand’s unappealing clothing lines.
“With inflation eating into the profits of the once reliable food offering, and a string of one-off expenses slicing into profits elsewhere, the net result has been to send pre-tax profits tanking by nearly two-thirds.
“M&S remains a dysfunctional dichotomy - premium food with dowdy clothing.”
Last year M&S had a big marketing re-think with the appointment of Valenstein & Fatt (formerly Grey London) to oversee its creative and digital fightback, culminating in the release of a campaign which united food and clothing for the first time earlier this month.