M&S has proven it will “never be the same again”, says GlobalData

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Following today’s release of Marks & Spencer’s figures for H1 FY2021/22; Chloe Collins, head of apparel at GlobalData, a leading data and analytics company, offers her view: “M&S successfully managed to beat pre-pandemic sales levels in H1 FY2021/22, with group revenue increasing 5.0% (£244.4m) on H1 FY2019/20, largely thanks to its outperforming Food division which was up 10.4% on a two-year comparative. Impressively, its Clothing & Home arm almost fully recovered too, down only 1.0% versus the pre-pandemic period, as online growth accelerated (60.8% up on H1 FY2019/20, 19.7% up on H1 FY2020/21). Following a significant loss last year, profit before tax also surpassed its two-year comparative (+17.9% on H1 FY2019/20), leading to a c17% boost in its share price in early morning trading, as the retailer has effectively proven it will “never be the same again.

“M&S’s partnership with Ocado continues to bear fruit, contributing a net income of £28.1m during H1 FY2021/22, with revenue for the 26 weeks to 29 August 2021 down only 2.7% on the year, despite the increased demand for home grocery deliveries in the comparative period due to COVID-19 lockdowns. This partnership, combined with M&S’s renewed focus on value in its own branded products, has made its food proposition more accessible to more consumers, with M&S products now accounting for 27% of Ocado’s sales. The retailer is banking on Percy Pig drawing shoppers in throughout the festive period, with its joyful Christmas advert backed with plans for a “Percy Pig world” within stores, providing plenty of gifting opportunities. However, Christmas potential could be limited by supply chain pressures, though M&S believes it is in a strong position to avoid stock shortages.

“For years, Clothing & Home has been M&S’s weak link, and though overall performance still lags behind food, full-price sales growth of 17.3% versus H1 FY2019/20 proves that the retailer may have finally turned its fortunes around. Its MS2 project has finally accelerated a switch to online sales, with Clothing & Home online penetration at 34.4% in the period, and it has also elevated its style credentials thanks to the introduction of third-party brands such as Nobody’s Child, Ghost and Seasalt, which are helping to entice new audiences to M&S.com. Following its acquisition of Jaeger in January, M&S relaunched the brand in October, claiming that this received an “encouraging” response. However, while Jaeger’s new styles are definitely more stylish and modern, its price points are still in the premium range and significantly higher than M&S’s own brand, which may limit how much it resonates with the retailer’s existing customer base.”