Marks & Spencer back in fashion - but UK still the weakest link

A strong set of results for M&S - though it's had to go back to the drawing board on its UK store layouts.

by James Taylor
Last Updated: 19 Aug 2013
Marks & Spencer reported its first set of full-year results since Marc Bolland took over as chief exec today, and pretty impressive they were too: the high street bellwether saw profits jump 13% to £714m in the year to April 2, with revenues up 4% to £9.7bn (although there was some rather complicated small print that suggests the numbers aren’t quite as good as they look on the surface). But although M&S gained market share in clothing, it may still be an area of concern for Bolland: UK profits were actually slightly down, largely because of lower margins on clothing sales. And M&S admitted today what some people have been arguing for ages - that its stores are way too hard to shop in these days...

M&S seems to have spent a lot of time and money revamping its stores in recent years, but we suspect few people would argue that shopping there has become a more pleasurable experience as a result (unless you like big ugly boarded-up sections). And the retailer basically admitted as much today: 'Our customers have told us they find our stores difficult to shop... While the last store modernisation programme improved the core infrastructure of our stores, it has not delivered an inspirational shopping environment for our customers.' So now the focus will be on 'segmenting our stores better... creating a more inspiring in-store environment, and improving in-store navigation,' it said today. The brilliantly job-titled 'director of space' Neil Hyland will be in charge of this process.

Still, perhaps it's a little churlish to quibble about this, because overall, Bolland's strategy seems to be bearing fruit already. Despite the store problems, it consolidated its position as the UK's leading clothing retailer: Bolland said its new ads were doing the business, helping to boost its market share by 0.5% to 11.7%, while there are apparently signs that customers are starting to trade up to pricier items (which is good for margins). Its market share in food also inched up, to 3.9%, while online sales jumped 31%, well above the market average. All told, UK like-for-like sales were up nearly 3% during the year, which is a pretty good result in a very tough market.

Bolland thinks the UK will continue to be a tough place to make money in the coming year - which is presumably why he's focusing so much of his attention overseas, where sales climbed 6% last year. He's planning more stores in India and China, as well as that symbolic return to France (its new flagship store on the Champs-Elysee is due to open in November). So all things considered, it's a good start from the new boss. Can he keep up the pace?

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