M&S had hard time in the recession, but things seem firmly back on track. After strong first-quarter results, performance over the 13 weeks to the beginning of October was also encouraging. One of the biggest drivers in sales was, surprisingly, homewares, which ‘roared’ ahead by 7%; meanwhile food was up 3.7%, from 3.6% during the same period last year. Clothing, though, was undoubtedly the star of the show, apparently helped along by products like its ‘two sizes bigger’ bra (no, we don’t know either) and ‘miracle’ crease-resistant linen. Perhaps customers are having a Carrie Bradshaw moment: apparently, the company has had a ‘record’ autumn for sales of women’s shoes, which M&S says was driven in part by its ad campaign.
But while it’s good news now, CEO Marc Bolland has warned that this run isn’t necessarily going to last. Apparently he's ‘cautious’ about the next few months, and warned that with the VAT hike scheduled for January, as well as Government austerity measures, consumers will have less to spend. Commodity prices will also be a problem, with the price of wheat and cotton both on the rise. Let's hope that doesn't mean more bad news for Jeremy paxman and other disgruntled M&S sock-wearers.
While Bolland's first task is to get through the next few months relatively unscathed, in the longer term, he faces a wider challenge: to return M&S to its former glory days, when annual profits hit £1bn. As it stands, the company faces increasing challenges from supermarkets, particularly on price. Ex-Morrisons boss Bolland is also relatively inexperienced when it comes to clothing, so he still needs to prove himself there.
Nonetheless, these results will be encouraging to shareholders. Own-brand Cava all round...