Marks & Spencer profits fall 10% as general merchandise sales dip 4.3%

Marks & Spencer: profits fall

Marks & Spencer: profits fall

Marks & Spencer has reported a 10% fall in profits in the first half following a decline in general merchandise sales including women’s clothing.

In the 26 weeks ending 29 September 2012, profit before tax fell to £290m compared with £321m for the same period last year.

Sales of general merchandise fell 4.3% on a like-for-like basis and 2.5% overall. 

Group sales nudged ahead 0.9% in the first half, lifted by food, international and multi-channel businesses.

Marks & Spencer conceded it had identified merchandising issues in its spring/summer clothing collections at the start of the financial year, which impacted performance in the first quarter. According to the company, it brought stock levels back in line for the autumn/winter season, improving merchandising processes and better aligning buying and external marketing. These moves delivered an improved performance in general merchandise in the second quarter, it said. 

Food sales were up 1.1% on a like-for-like basis and international sales ahead 3.6%.

Multi-channel growth – a third of dresses now bought online

Multi-channel sales were up 17.8%, outperforming the market by 8ppts (source: BRC). Marks & Spencer said traffic to its site continued to grow to an average of over 3.4m weekly visitors with good conversion rates. Over a third of dresses and one in five suits are now purchased online, it said.  

The retailer said its Shop Your Way service continues to grow and over 43% of multi-channel orders are collected in store or ordered in store for home delivery, up 23%. 

Marks & Spencer said sales from new channels increased almost threefold in the first half with the addition of 112 new ‘Browse and Order’ points across 40 stores and investment in over 1,500 iPads for sales staff, in order to offer a more personalised service in store. A trial of an e-boutique concept, Style Online, has also been extended to 12 smaller format stores.  

According to Marks & Spencer, sales from its new mobile site increased by 77% over the first half and its first transactional iPhone app has received over 340,000 downloads.  

Marks & Spencer said its French e-commerce business performed well with over 2.5m customers visiting the site during the half. It launched an Irish website in April 2012 and plans to launch transactional websites across an additional four European markets later this month. 

Food – new lines and in-store improvements

New look Food Halls

New look Food Halls

In food, Marks & Spencer launched 200 British-inspired lines and a further 1,000 new lines focusing on world cuisines. 

It also introduced the Simply M&S value range, offering 700 products.

In-store over 190 Food Halls have now been updated, with the introduction of delis, pasta bars and in-store bakeries. These stores continue to outperform the rest of the chain in terms of sales, with the in-store bakery being the best performing department during the first half, said Marks & Spencer.

Marks & Spencer said it had also improved on-shelf availability by a further 1% through the implementation of our new space, range and display system and invested in employee zoning in the Food Halls to improve the service standards for our customers.