Pre-tax profits for the six months to October stood at £187.3million, a major turnaround from a £87.6million loss last year. Online sales in particular have seen dramatic growth up 60.8 percent for clothing and homeware. Despite the strength of online sales over in-store M&S is still showing a commitment to bricks and mortar with plans to open 20 new stores, making up for the closure of three others earlier in the year. Chief Executive Steve Rowe said: “Thanks to the hard work of our colleagues, it is clear that underlying performance is improving, with our main businesses making important gains in market share and customer perception. The hard yards of driving long term change are beginning to be borne out in our performance.”
Food meanwhile saw a 10.4 percent boost in sales aided by M&S’s delivery deal with Ocado which has opened three new customer fulfilment centres.
Ocado Retail is aiming to ramp up capacity over 50 percent since M&S invested and has plans to reach 700,000 orders per week.
Senior Investment and Markets Analyst at Hargreaves Landsown Susannah Streeter commented: “Marks and Spencer may have been late to the grocery e-commerce party, but arriving with Ocado in arm, it’s muscled into a prime spot on the dance floor, and is enjoying the hits.
“Rather than a department store which sells food as an extra, Marks is metamorphosing into a grocery powerhouse which sells clothes and homewear as add-ons.”
However despite the strong performance Mr Rowe also struck a cautious tone warning “we won’t overclaim our progress” adding “we’ve called out the Covid bounce back tailwinds, as well as the headwinds from the pandemic, supply chain and Brexit, some of which will continue into next year.”
As in many businesses currently supply chain issues could prove a major issue to Marks and Spencer with the company today warning it is “planning for significant supply chain cost increases in the second half of the year with further on-costs next financial year.”
The company also warns costs will become “steeper again in the 2022/23 year.”
Ms Streeter suggested the clothing side of the business could face a slower recovery due to both “supply issues and also the lower demand for smarter outfits M&S is known for, as so much of the workforce continues to work from home”.
Investment Director at AJ Bell Russ Mould agreed clothing was an area the company needed to look at saying: “Marks & Spencer has a reputation for being the place you buy your undies and socks, or perhaps push the boat out and buy a pastel-coloured sweater.
“Yet that isn’t enough to sustain a proper clothing business.
“Suits and formalwear have been pushed to one side and more floorspace given to athleisure, jeggings and jeans.
“The only problem is that so many of its customers are old and don’t want to wear splashproof running bottoms.
“The company needs to attract a younger crowd and it could take a long time to change its image as the brand is still associated with slippers and socks.”
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Marks and Spencer recently announced a trial of stocking Jaeger clothing in a number of its stores around the country as part of its ‘Brands at M&S” strategy.
Aimed at trying to expand customer appeal it has seen M&S also stock brands such as Joules and Phase Eight.