Following today’s release of M&S’s figures for the year ending 1st April 2023; Eleanor Simpson-Gould, senior retail analyst at GlobalData, a leading data and analytics company, offers her view: “M&S’s revitalised business strategy is proving effective just one year in, with end of year results highlighting renewed sales and customer engagement across Food, Clothing & Home. However, investment into reshaping for growth brings growing pains for M&S. Reporting a profit before tax and adjusting items of £482m, down from £522.9m in 2021/22, a focus on supply chain modernisation, omnichannel growth and reshaping physical store presence amid turbulent economic conditions has unsurprisingly softened operating profits. With a guidance for modest growth in revenues for FY2024 M&S’s turnaround strategy is providing a steady footing for the year ahead and a return of dividends for shareholders.
“M&S’s reputation for innovation and quality helped deliver a successful year for both food sales and volumes, with LFL sales up by 5.4% and growth across all quarters. Responding to increasingly fierce competition within the UK grocery market to retain customer loyalty and offer value, M&S has sharpened prices on everyday value lines. Sales of ‘Remarksable value’ lines were up by 40%, and these lower prices will be key to build on FY2023’s improved transaction frequency and broaden the retailer’s appeal. At the same time M&S is right to continue to invest in its premium positioning. Differentiating more on product quality and range innovation will boost the retailer’s attractiveness to shoppers looking to dine in more as the price of meals out escalates. The roll out of M&S vibrant new food hall format provides a further reason to be optimistic about the retailer’s future.
“On a less positive note, the £29.5m loss at Ocado suggests retaining online shoppers post-pandemic is not proving easy. Increased movement of customers across grocers has increased Ocado’s active customer numbers but failed to improve revenue. With lower food price inflation beginning to feed into the retail market, M&S must capitalise on positive growth from the UK online grocery market and continue emphasis on driving down overhead costs from Ocado operations.
“Targeting modern mainstream customers, M&S’s rejuvenation of clothing & home propositions is beginning to pay off. Clothing & Home sales increased 11.2% (LFL) with full price sell through sustained at 88% from last year as a result of focus on core clothing lines, clear pricing and improved availability. Greater supply chain agility to respond to demand, launch of The Sports Edit in early 2023, capsule wardrobe focus and partnerships with brands such as Nobody’s Child are contributing to much improved style perceptions. M&S’s investment in omnichannel fulfilment, evolving clothing & home ranges alongside third-party brand partnerships will stand M&S in good stead to retain growth in non-food for FY2024.”
