Following today’s release of Marks & Spencer Q3 figures for 2019/20, Kate Ormrod, lead retail analyst at GlobalData, a leading data and analytics company, comments: ‘‘Having previously offered hope by reporting an improved clothing & home performance in October, with full price and planned promotional sales rising 2.7%, the division has failed to maintain momentum throughout the rest of Q3 with lfls falling 1.7%. While there were undoubtedly distractions hindering non-essential retail spending late last year, not least the general election, it is clear that M&S remains unable to excite shoppers enough to buy. The retailer maintains that there are signs of recovery in womenswear, but now interestingly points to menswear weakness as the problem, while gifting also underperformed.
“The standout figure for Q3 is the terrible online performance for clothing & home, with growth of just 1.5%. Like Next, M&S needs the online channel to make up for its lacklustre stores, but unlike its closest rival, its digital proposition has not been suitably honed to do so. Calling out competitor discounting in December as a reason for underperformance is somewhat feeble given how predictable stronger promotional activity was after such a challenging 2019, though M&S does state that there were also lower furniture dispatches in early Q3 which added to its online woes.
“There are silver linings within these results however: food has performed well, with lfls up 1.4%, helping to lift total UK lfls to positive territory at 0.2%; and overall full year profit guidance remains unchanged, though gross margin will likely come in towards the lower end. In food, M&S’ focus on value has again borne fruit, with volume improvement especially over the 2-week Christmas period. Though CEO Steve Rowe laments issues with waste and supply chain within its food business, its transformation strategy is evidently more effective than in fashion.
“Despite the gentle progress already made, with Rowe stating that the ‘worst of the issues of the first six months’ have been halted in clothing, there remains a mountain to climb within the division. The appointment of Richard Price, currently CEO of F&F, as clothing & home MD, who is due to join this year, does feel like a step in the right direction and is certainly a more logical appointment than predecessor Jill McDonald. While its store closure programme inevitably puts a dampener on its performance, 2020 is the year that M&S must start delivering on the promise of its transformation plan in clothing & home, or risk confirming that it was indeed too little too late.”