LONDON — Marks and Spencer Group plc is tightening operations, dropping prices in some regions, and broadening its overall offer in a bid to drive growth in difficult times.
This story first appeared in the November 5, 2009 issue of WWD. Subscribe Today.
On Wednesday, the British department store chain reported profits remained broadly flat in the first half ended Sept. 26, falling 0.4 percent to 220.8 million pounds, or $351.1 million, from 221.7 million, or $352.5 million, due to a drop in gains from property disposals.
Sales rose 2.8 percent to 4.34 billion pounds, or $6.9 billion, from 4.22 billion pounds, or $6.7 billion.
Despite the recent disposals, the company still boasts a 3 billion pound, or $4.9 billion, U.K. property portfolio.
All figures have been converted at average exchange rates for the period.
Chairman Sir Stuart Rose said the company was pleased with the first-half performance, adding that M&S has had a “good” start to the third quarter. “However, the market remains competitive and…we remain cautious about the outlook for Christmas and the year ahead,” he said.
He attributed the very slight gain in adjusted pre-tax profit to “tight management of costs and margin,” and stressed M&S increased its share of the British clothing market to 10.1 percent by value, and 10.5 percent by volume during the period.
The company said its new collaboration with the Australian men’s designer Jsen Wintle has done well so far with a 199 pound, or $326, wool coat selling strongly.
The store said it’s also broadened the footwear and accessories ranges, and adjusted the price architecture across all the clothing brands so customers can trade down to a 35 pound, or $57 raincoat, or up to a 199 pound, or $326, cashmere coat.
U.K. sales, which generate the lion’s share of M&S’ revenue, rose 1.8 percent to 3.89 billion pounds, or $6.19 billion, from 3.82 billion pounds, or $6.07 billion, boosted by store openings, clothing and food.
Rose said store openings over the next six months would add an extra 3 percent to the total retail space in the U.K., and an additional 15 percent to retail space internationally.
In the food category, where sales rose 1.8 percent, M&S plans to break with tradition and begin selling branded grocery and household products alongside its hundreds of private label brands. The addition of the 400 new brands — which range from Absolut to Listerine to Snickers and Cheerios — is meant to prevent M&S customers from completing their grocery shopping elsewhere.