LONDON — Marks & Spencer reported sales and profits were down in the financial year as it shifts shape, from its shrinking store footprint to its smaller clothing sizes and plans for fewer collections, to its emphasis on digital through a new deal with Ocado.
On Wednesday, the British retailer said revenue was down 3 percent to 10.38 billion pounds in the 12 months to March 31, with profit before tax and adjusting items falling 9.9 percent to 523.2 million pounds. Profit after tax climbed 28.2 percent to 37.3 million pounds, due to a decrease in adjusting items including operating costs.
The retailer closed 26 full-line stores during the period and opened 48 units, many of them with smaller formats and a focus on food, and without a clothing offer.
M&S is also casting a fresh eye over its store interiors, pointing out that around one-third of its large-format units were opened before World War II, and three-quarters are older than 25 years.
“Progress on renewing the stores has been limited to date, although we have moved a lot of internal walls and sight barriers. A renewal brand format and a modernization will be piloted in the year ahead,” the company said.
The clothing and home division was down 3.6 percent in the year, partly driven by the store closure program, with like-for-like sales down 1.6 percent. Discounted sales decreased, as a result of the planned reduction in stock-into-sale.
U.K. clothing and home online revenue grew 9.8 percent, ahead of the clothing market, with strong growth in women’s wear, following improvements to the brand’s web site and delivery proposition.
M&S admitted that its clothing range remained “too wide,” with the volume of options “splintering our buying scale and making our shops challenging to navigate.”
The retailer also admitted — finally — that its clothing sizes are far too big for the average customer.
“We have made progress in pruning options and introducing slimmer fits and more mid-sizes, and the customer response has been very strong,” it said. The company added that its new denim launch produced an initial 20 percent sales uplift, with sales of jeggings climbing 30 percent during a recent campaign.
M&S plans to reduce discounting further, slash the number of clothing options and range duplication and “focus on style and fashion and additional investment in value.” It also plans to re-launch the Per Una range, which had been a shop floor hit 20 years ago.
“We are deep into the first phase of our transformation program and continue to make good progress restoring the basics and fixing many of the legacy issues we face,” chief executive officer Steve Rowe said on Wednesday.
“Whilst there are green shoots, we have not been consistent in our delivery in a number of areas of the business. M&S is changing faster than at any time in my career — substantial changes across the business to our processes, ranges and operations and this has constrained this year’s performance, particularly in clothing and home. [But] we remain on track with our transformation and are now well on the road to making M&S special again,” he added.
M&S said the food business has been showing “good signs of progress” in halting the decline in like-for-like revenue. U.K. food revenue declined 0.6 percent in the 12 months, with like-for-like revenue down 2.3 percent, reflecting the adverse impact of Easter timing in both the first and fourth quarters.
Adjusted for Easter timing, like-for-like revenue declined 1.5 percent, with an improving trend in the second half of the year, and like-for-like revenue and volume growth in the fourth quarter.
The retailer said its partnership with online order and delivery service Ocado through a new JV “opens up the possibility of substantially increasing our grocery market share in the medium term.”