Sales at Marks & Spencer fell in the first half of its financial year, with demand for clothing and food hit by disruption from the latest attempt to reinvent Britain’s most famous retailer.
After more than a decade of failed turnaround programmes, M&S is now targeting sustainable, profitable growth in three to five years by shutting less successful stores. It warned on Wednesday that sales were unlikely to improve soon.
“Trading conditions remain challenging and the headwinds from the growth of online competition and the march of the discounters remain strong in all our markets,” it said.
Results on Wednesday showed that its previously reliable food business was particularly weak, with like-for-like sales down 2.9 percent — below expectations of a 2 percent fall and reflecting the need for price cuts.
Gross margin in the division fell 25 basis points.
Sales in its clothing and home division fell 1.1 percent on a like-for-like basis while its gross margin was down 20 basis points.
The group said its full-year outlook was broadly unchanged and it maintained its interim dividend however as cost cuts helped underlying profit to rise by 2 percent to £223.5 million in the six months to Sept. 29, ahead of analysts’ average forecast of £203 million.
Like other established retailers, M&S is trying to deal with the shift of clothing sales online along with unrelenting price competition from supermarkets and discounters.
It has launched its latest turnaround plan last November, two months after retail veteran Archie Norman joined as chairman to work alongside chief executive Steve Rowe.
“Against the background of profound structural change in our industry, we are leaving no stone unturned and reshaping our business, its organisation and culture,” said Rowe.
M&S is targeting 100 British store closures by 2022, as it strives to make at least a third of clothing and home sales online. It has said it could close even more as it manages its property estate more pro-actively.