After a string of pretty dismal results, Marks & Spencer finally had something to shout about today: the high street bellwether reported that total sales were up 2.7% in the three months to September 26, with like-for-likes down just 0.5%. Admittedly it’s a fairly sorry state of affairs when any kind of drop (especially the eighth in a row) counts as a good quarter – but it also happens to be M&S’s best result for two years, and suggests that it’s finally managed to start wooing shoppers back into its stores. It’s even managed to improve margins in the process. All of which should take some of the pressure off executive chairman Sir Stuart Rose...
Sales may have been down, but it was still a much better performance than the City was expecting. Clothing did better than forecast, while better still as far as Rose is concerned, he seems to have stopped the rot in Food (so to speak): after a big decline in sales at the start of the downturn, sales were flat last quarter (though best not mention how Waitrose did in the same period). M&S is also doing well outside the UK, where sales were up nearly 10%, and online, where sales jumped 30%. Clearly internet shopping is a big growth area for it at the moment (though it’s worth pointing out that ASOS sales were up 47% in the six months to September, the all-conquering yoof fashion site said today).
The City will also have been pleased to hear that profit margins are also likely to come in higher than expected – Rose says this was due to ‘better stock control, sourcing and supply chain management’ (which may or may not involve squeezing its suppliers until the pips squeak). So that might put an extra £50m on the bottom line this year.
But although Rose reckons trading conditions have bottomed out, he’s not too hopeful about the prospects of a quick rebound – in fact, he suggested that things would remain tough for a good 12 to 18 months (not helped by the Government’s brilliant plan to put VAT back up again right in the middle of the January sales, he pointed out ruefully).
The evidence of the last year does suggest that M&S was caught napping slightly by the extent of the downturn – but Rose didn’t suddenly become a bad leader overnight, and he does seem to have turned things around. He’s now bought himself some much-needed time to concentrate on the search for his successor – although if he’s right about these timings, he’ll probably end up bowing out before the retailer recovers its former glory. Good news for his replacement, but not for his hard-earned reputation.
In today's bulletin:
Relief for Rose as Marks & Spencer sales recover
City bad, SMEs good - Brown bites the hand that fed him
Recruiters get £40m OFT fine after whistleblowers expose cartel
Will HR soon be a thing of the past?
Downturn sees rise in corporate prisoners