M&S outperforms in food but struggles in clothing and home sales
Marks & Spencer says "number one priority is to restore our clothing and home business to profitable growth, while maintaining the pace of growth" within food division
2 June 2016
Marks & Spencer Group’s recently-announced full year results brought some encouraging news for the retailer. For the 53 weeks ending 2 April 2016, group revenue was up by +2.4% to £10.6bn. Nevertheless basic earnings by share fell by -16.2% to 24.9p.
Within the food division, M&S reported continued strong growth in food as it “outperformed a competitive market”. The retailer opened 75 new Simply Food stores which it said are performing ahead of expectations.
The company says it will continue to grow its food business by “build[ing] on strengths” with a “focus on innovation, quality and choice” and a “commitment to value credentials” which will deliver “competitive pricing while maintaining margin”. Another key priority on the retailer’s list was “improved convenience” with plans to extend the Simply Food store opening programme.
However while the group continues to outperform on food, it underperformed on clothing and home sales. In a statement, the company described this as “not satisfactory” and said it was outlining plans to address the issue.
Commenting on 25 May, when the results were announced, Robert Swannell, M&S chairman, said: “Steve Rowe is today setting out his priorities as our new chief executive. His number one priority is to restore our clothing and home business to profitable growth, while maintaining the pace of growth and success of our market leading food business.”
However Connor Campbell, a senior market analyst at www.spreadex.com, sounded a note of caution about the results, commenting: “Even with a better than expected 4.3% rise in full year operating profit to £689 million, the news was a bitter pill to swallow; Rowe warning that his plan, which includes lowering clothing prices while improving their quality, will have an adverse effect on profits. This took the stock 7% lower, negating the gains made in the past few weeks following Rowe’s reshuffling at the top.”