Marks and Spencer

LONDON – First-half sales at Marks and Spencer were up 2.6 percent, while profits grew five-fold after adjusted items, as company chief executive Steve Rowe pursues his slow-but-steady turnaround of the once-mighty retailer.

Revenues in the 26 weeks to Sept. 30 totaled 5.13 billion pounds, while profits were 84.6 million pounds after M&S reduced losses from the previous period by reorganizing its pay and pensions policy and reducing charges related to M&S Bank.

While clothing and home sales were broadly flat, full-price sales were up 5.3 percent due to a general upgrade of the division, and fewer clearance sales and promotions.

“We have made good progress in remedying the immediate and burning issues at M&S I outlined last year,” said Rowe, adding that early results were encouraging in the clothing and home division, while international is now “profitable and robust.”

He said the company would see stronger headwinds in food, due to inflation and the weaker pound, and added the business still has many structural issues to tackle over the next five years in the context of a “very challenging” retail and consumer environment.

Rowe added that the strategy for clothing, going forward, would be to build on M&S’s strengths, reduce the amount of merchandise on offer and modernize the supply chain, which is too slow and clunky for the digital era.

“Our position in clothing and home has eroded over the last 15 years as online retailers, new international competitors and discounters have taken market share,” he said.

“However, the business retains very strong market positions in lingerie, school wear, denim, suits and other areas that illustrate our capability. In the next phase of our transformation, we will continue to modernize our supply chain, which needs to be faster and lower cost than today,” Rowe added.

He said digital fulfillment will require further investment to enable more rapid growth online and help M&S match its increasingly fast competitors.

“It is our ambition that M&S will become the U.K.’s essential clothing retailer. At all levels, we are sharpening our ranges to provide better choices with fewer options and delivering contemporary wearable style to become more popular,” he said.

With regard to online, the company said investments will be aimed at ensuring a more personalized and seamless customer journey “and much greater convenience.”

He said M&S is aiming to grow its online sales as it reduces the number of large-format stores, and for one-third of its clothing and home offer to be online in the medium term. The company is also accelerating its U.K. store rationalization program, including closures, space reduction and relocations.

“Our intention is to re-shape the estate to focus on high volume locations with conforming store size and fit for purpose back-of-house facilities. We will prioritize a digital-first approach in our stores and in our central functions,” he said.

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