Indian summer blip at ‘improving’ M&S
The unseasonably warm September dealt another blow to Marks & Spencer as customers delayed buying winter clothing.
Sales growth over the first five months of the company’s financial year was halted by the Indian summer which saw group revenue fall by 0.7% over the six months to the end of September. Its online business slumped by 6.3%, though the retailer said it is on track to return to growth.
M&S said the new ranges proved popular with customers, leading to a 1.3% rise in sales in the first five months, but the mild September weather meant sales of clothing fell by 1.6% over the half year and 2.2% on a like-for-like basis.
Chief executive Marc Bolland must be wondering what else he has to cope with in trying to gain some return from his investment in womenswear. He said it had been a tough market in September, but at least the overall picture showed improvement and shares rose 7% in early trade as investors warmed to the rise in profit and lift in half-year dividend on the back of strong cash generation.
Food continues to be the big success story, up 3.6% over the year and 1% on a like-for-like basis. Bolland announced that M&S will increase the number of new Simply Food stores from 150 first planned to 200.
“M&S delivered sales growth and increased profit in the first half despite a tough market, particularly in September,” he said. “We are pleased with the progress we have made against our key priorities for the year: general merchandise gross margin, improving womenswear, driving food growth and cash generation.”
Pre-tax profits for the period rose 2.3% to £268 million. The interim dividend is up 0.2p to 6.4p.
The contrasting performance of clothing and food will continue to weigh on Bolland who must have been confident of a better performance until the colder weather chose to stay away and hit sales of the winter ranges.
Phil Dorrell, director at consultancy Retail Remedy, says will also need to tackle the online operation which is performing far worse than its rivals such as Next, H&M and Zara which are attracting increasing numbers of younger customers.