Marks & Spencer half-year clothing sales down 5.3%, store closures confirmed

Marks & Spencer has reported a 5.3% decline in sales for its Clothing & Home division in the six months to 1 October 2016 but claims it is witnessing "early signs" that action taken to arrest the decline is beginning to work. And CEO Steve Rowe has also confirmed anticipated store closures and international retrenchment.

The retailer posted total group revenue of £4,993.5m (up 1% year on year) however underlying profit before tax was down 18.6% at £231.3m. Rowe said the profit slide was was "as expected" given the retailer had experienced lower Clothing & Home sales and the figure also included a "significant charge relating to pension changes".

Rowe also confirmed rumours that surfaced last week that M&S would close a significant number of UK Clothing & Home stores and focus on opening smaller Simply Food outlets.

"We have now completed a forensic review of our estate both in the UK and in our International markets. Over the next five years we will transform our UK estate with c.60 fewer Clothing & Home stores, whilst continuing to increase the number of our Simply Food stores. In the future, we will have more inspiring stores in places where customers want to shop that complement our growing digital offer," Rowe said.

The number of UK store closures is higher than expected, with sources close to M&S saying the figure would be around 30 last week.

M&S is also planning a complete shake-up of its international portfolio and shift its focus to franchising as opposed to directly owned stores. "Internationally, we propose to cease trading in ten loss making owned markets, but intend to continue to develop our presence through our strong franchise partners," Rowe explained.

The CEO, who has worked for M&S for his entire working life and who took the top job earlier this year following the departure of Marc Bolland, said these "tough decisions [were] vital to building a future M&S that is simpler, more relevant, multi-channel and focused on delivering sustainable returns."

In Clothing & Home, which posted a 5.3% decline or 5.9% on a like-for-like basis, he said the retailer had stripped back its number of lines by 10% and bought "with greater authority", as well as making improvements to "core availability" and fit. M&S has often come under fire for not backing winning items and having insufficient stock of strong sellers such as outerwear.

It has also focused on improving its full-price market share by reducing promotions. Full price value share was up by over 30bps with further improvements in volume share, although the retailer saw a 20bps decline in overall value share (Kantar World Panel).

"We’ve also changed the layout of our stores to reflect how our customers like to shop, with more of our clothes grouped together in product categories, rather than in brand co-ordinated departments. We’ve hired 3,300 new customer assistants to work in areas that really matter to our customers such as fitting rooms and till points. As a result, our customer satisfaction levels are the highest they have been for over three years," added Rowe.

To simplify the offer further M&S will drop several sub-brands, including Indigo, Collezione and North Coast and focus on its core M&S brand and the sub-brands that are "most relevant to our customers", such as Autograph, per una and Blue Harbour.