Not much to shout about for M&S at its half-year results today, with sales marginally down on the same period in 2008 – although given its recent travails, we suppose the good news is that at least it's stopped the rot. More interestingly, executive chairman Sir Stuart Rose announced that M&S is going to start selling third-party brands in its food stores for the first time in almost 50 years, presumably in the hope that allowing people to stock up on Kit-Kats along with their Extremely Chocolatey Mini Rolls will stop it losing customers to the likes of Waitrose. Worth a go, we suppose…
It’s true that today’s results could have been worse: M&S reported pre-tax profits of £306.7m for the six months to September 30, almost identical to the £307.8m it made in the same period last year. But there were some worrying signs. Overall like-for-like sales across its 600 UK stores fell 0.9%, while even pricey ad campaigns featuring Take That, Twiggy and Myleene Klass couldn’t stop clothing sales sliding 1.4%. As Sir Stuart himself has said, the slump may have bottomed out, but any recovery is likely to be long and protracted. What’s more, its pension deficit is also in pretty bad shape too, ballooning from £152m to £521m in the last six months.
But it’s the once-thriving food department that took centre-stage today. Although new boss John Dixon – supposedly a candidate to succeed Sir Stuart – has apparently managed to stem the mass exodus of the early recession, M&S’s market share dropped again last quarter, from 3.7% to 3.5%. So it’s decided to start selling 400 third-party products, including cupboard staples such as Marmite, Nurofen and PG Tips – something it hasn’t done since the 1950s. Dixon said that there are some products that M&S just can’t replicate or compete with (fair enough for Marmite, but Nurofen?) and that M&S was just listening to its customers. Not before time, some might say.
Nevertheless, Sir Stuart sounded pretty upbeat about the company’s future today. He’s even planning to reward its 70,000 permanent store staff with a £60m bonus pot, assuming the chain puts in a decent performance over Christmas. Let’s hope M&S’ new lines – including festive tipples like Baileys – can help deliver some much-needed Christmas cheer…
In today's bulletin:
Unions rejoice after GM U-turn on Vauxhall sale
Marks & Spencer takes a punt on Marmite to lift flat sales
Eco-friendly paint scoops the prize at Green Business Awards
Editor's blog: Dealing with Britain's fall from grace
A rail ticket from Newquay to Skye? That'll be £1,000, please