M&S turnaround plan fruitful as sales jump nearly 10%

Marks & Spencer (M&S) has recorded an almost 10 per cent hike in sales for the year ended 1 April following the roll out of its turnaround strategy.

The British retailer saw strong growth across its core categories, with clothing and home sales increasing by 11.5 per cent to £3.7 billion and food sales up by 8.7 per cent to £7.2 billion.

M&S said that higher clothing sales reflected a more confident approach to buying and its focus on the “modern mainstream customer” as part of its long-term growth plan.

It added that food sales had outperformed others in the market in terms of value and volume, attributing this to its product development and investment in its value lines.

The company poured more money into its cheaper products earlier in the year, in a move that included sharpening the prices of over 100 'Remarkable value' lines. It said that this meant the business did not pass through the full impact of cost inflation on its margins.

However, not all the results were welcomed, with pre-tax profits before adjusted items down by 7.8 per cent from £552 million to £482 million. M&S says that the lower profits in part reflect the withdrawal of pandemic-related rates relief from the government, which set the company back £59.8 million in the latest financial year.

"One year in, our strategy to reshape M&S for growth has driven sustained trading momentum, with both businesses continuing to grow sales and market share," said Stuart Machin, chief executive of M&S. "Our food and clothing & home businesses invested in value to protect customers from the full force of inflation which, whilst impacting margin, was the right thing to do, as serving our customers well is the only route to delivering for our shareholders."

The chief executive said that higher sales in store and online – supported by growth in its Click and Collect sales, active app users, and Sparks loyalty membership – demonstrated the "emerging power" of the company's omnichannel strategy.

Looking ahead, the retailer said that the new financial year had demonstrated a strong start, with food and clothing continuing to see sales growth.

"While the economic outlook for consumer spending is uncertain, cost inflation remains high, and market conditions are expected to become more challenging, the strategy is beginning to deliver improved performance and there remains much within the Group’s control," said the company, adding that it expects modest growth in revenues for the year.

M&S said that it has £150 million worth of savings planned for the year as part of its structural cost reduction strategy. It is also planning to open eight full-line and 10 food stores over the next 12 months.

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