Marks & Spencer is on the up ‘but’ hardly scaling new heights, says Planet Retail

Marks & Spencer has reported an improved sales trend in clothing, food continues to outperform the market and its gross margins are heading in the right direction but still too many ‘buts’ remain, according to Stephen Springham, chief knowledge officer, Planet Retail.

In the 13 weeks to the 28 March 2015, Marks & Spencer reported a 0.7% increase in like-for-like sales of general merchandise, which includes clothing. Like-for-like food sales also improved 0.7% in the quarter and by 3.7% on a total basis.

“A return to like-for-like growth in the core clothing category would ordinarily have the champagne corks popping at M&S. But the fact that this has been achieved against such weak comparables (the corresponding period last year coincided with the botched relaunch of the website) means the fizz quickly goes flat,” said Springham. “An improving trend, yes, but still underperformance in a UK clothing market that showed as much as 4-5% growth over the period. Marks & Spencer is on the right track maybe, but still losing market share,” he said.

Springham said margin improvement in general merchandise has been driven by higher volumes of full-price merchandise and more targeted promotional activity. But M&S was carrying more stock going into the sale period than planned and, holding its price position and not discounting willy-nilly, did not sell as many items as it would have hoped, he said.

“Food is continuing to achieve like-for-like growth in a hugely challenging market. And with gross margin improvement to boot. No buts here,” said Springham.

“As ever, a very mixed picture and one certainty: the business needs to start reducing those ‘buts’ or management butts might still be on the line…”

Bryan Roberts, director retail insights, Kantar Retail, said it was too early to label the performance a turnaround. “While the general merchandise numbers might be the cause for muted celebration, the overall verdict is that the stars have aligned for a single quarter and we await consistent repetition of this feat before we can proclaim a recovery,” he said.

“What is heartening is the progress we have seen in recent store visits in terms of aspects of the range, merchandise and store fit.  That said, womenswear needs to be consistently better across the whole range. The occasional screamer into the top corner doesn’t negate smashing the ball over the bar for the last four years.”