Lacklustre Christmas for M&S but no profit warning, says GlobalData

Following today’s release of Marks & Spencer Q3 figures for FY2018/19, Kate Ormrod, lead analyst at GlobalData, a leading data and analytics company, comments: ‘‘Given the significant transformation programme underway there is little shock value in a poor set of M&S Q3 results, with UK sales falling 2.7% to £2,782m; indeed the real headline is the fact that full year profit guidance remains unchanged. However, despite mentions of a ‘steady performance’, ‘early encouraging signs’ and ‘progress’, slow and steady will not win the retail race and M&S needs to show real evidence of change in ranges and in results, as the pressure to deliver continues to mount.

“With few shoppers willing to pay full price in the run up to Christmas, leaving spending late and hunting for deals, the decision to continue to shun Black Friday was perhaps a misstep this year as Clothing & Home lfls fell 2.4%. Though M&S did offer 20% off to Sparks members the week before Black Friday, not tempting non-Sparks shoppers with deals would’ve ruled it out of consideration in what was an extremely promotional market. Unseasonal weather has also been listed as a factor in November’s weak trading but this is nothing new and strategies to combat this should long be in place. 14% growth in Clothing & Home online is cheering, with M&S praising proposition and operational changes as well as its activities on social media. The plan to have a digital-first mind-set is logical, but there cannot be a disconnect between stores and online in terms of proposition as it will only serve to confuse and frustrate multichannel shoppers.

“The food division’s performance, with lfls down 2.1%, has been hit by its investment in price, focusing on offering shoppers better value – needed in a market where price is everything and the discounters continue to thrive. M&S notes positive signs of volume improvement over the Christmas weeks, and states it expects this momentum to continue. All eyes will be on newly appointed non-executive director Justin King to support the rebuilding of M&S’s food proposition. M&S has lost its edge when it comes to food innovation, something which previously set it apart from rivals. With product remaining key in the premium market, greater investment in exciting and delighting food shoppers is essential to drive basket sizes.”