Marks & Spencer results not up to the mark – especially in comparison with Primark
Latest results reveal a stark difference in the performance of the two retailers
Marks & Spencer posted a ninth straight quarterly fall in clothing sales yesterday. REUTERS/Andrew Winning
Marks & Spencer’s spin doctors should have checked the company reporting schedules more carefully before they settled on November 5th to announce figures for Britain’s biggest clothing retailer.
Sharing the City spotlight yesterday with discount retailer Primark only served to underline the stark difference between the performance of the two retailers. As 129-year- old M&S reported its ninth consecutive fall in quarterly sales, its younger rival produced another stellar set of results, pushing its full-year profits through the half-billion- pound barrier for the first time.
The tone was gloomy at M&S. Although chief executive Marc Bolland noted signs of improvement in the struggling clothing division, he said there was little evidence of shoppers loosening their purse strings – not at M&S anyway. He declined to say whether the group would be able to push sales ahead over the all- important Christmas period, saying the clothing turnaround was “a journey, not a race”.
At Primark, on the other hand, parent company Associated British Foods enthused on “a remarkable year” for the fast-fashion chain and highlighted its “excellent prospects” over the next few years.
In the next 12 months, it plans to add more than a mill- ion square feet of selling space.
Margins were up at Primark but down at M&S. Primark’s newly opened and refurbished stores “have never looked better”, while M&S is still struggling with its format.
M&S was heavily reliant on discounting as it cleared the rails for the new autumn and winter ranges, while Primark highlighted its sparing use of promotions as a sales driver.
M&S is continuing with its expansion, as is Primark. New space propelled a 22 per cent jump in Primark revenue over its past financial year, taking the total to £4.3 billion (€5.12 billion), but the retailer, which trades as Penneys in Ireland, still pushed revenue from existing stores ahead by 5 per cent.
For M&S, which was reporting on its first half, like-for-like sales in clothing fell by 1.5 per cent, their ninth decline. Half-year profits fell for the third year, down 9 per cent to £262 million.
This is also the third year of Bolland’s turnaround plan at M&S – he arrived to replace Stuart Rose back in May 2010 – and the clock is ticking on his tenure at the retailer.
The much-hyped new fashion range was included in yesterday’s results for just three weeks so cannot have been expected to make that much of an impact. The food business continues to do well, with like-for-like sales rising by 2.5 per cent for the half-year, including an advance from 1.8 per cent in the first quarter to 3.2 per cent in the second, its 18th quarter of growth.
But in clothing a slight slowdown in the sales slide from 1.6 per cent in the first quarter to 1.3 per cent in the second quarter is hardly a triumph for a company supposedly in the final leg of recovery.
M&S shares ended the day almost 5 per cent higher, at 509p, but that probably owed more to a resumption of vague takeover speculation, together with last week’s revelation that Bill Adderley, founder of homewares retailer Dunelm, has built a stake of just over 3 per cent in the group. This makes him M&S’s biggest private shareholder and he has said he is supportive of Bolland.
After yesterday’s results bookie Paddy Power was swift, as always, to offer odds on the timing of Bolland’s exit.
He will no doubt be relieved to hear the odds of his departure before the end of the year are 33/1, but those narrow to 6/1 in the first half of next year and to 5/1 in the second half of 2014. The bookie is also offering a price of 7/1 on his replacement being none other than Paul Marchant, chief executive
M&S has just launched its Christmas advertising campaign. We’ll see the impact of the ad campaign, and the new ranges, in M&S’s next trading update, which will detail how it has fared over the crucial festive season.
That date is already in the diary for January 9th, but
let’s hope for Bolland’s sake
at least that Primark picks a different day to deliver its own festive magic.
Fiona Walsh is business editor of theguardian.com