Marks & Spencer to accelerate transformation as it posts H1 numbers

Marks & Spencer said it planned to "accelerate our transformation plan to face into long term structural change in our market" as it revealed its H1 figures this morning.

The retailer, which has been focused on reviving its Clothing & Home business, revealed that group revenues were up 2.6% at £5.13bn in the 26 weeks to 30 September 2017, while profit before tax was down 5.1% at £219.1m.

Clothing & Home sales were flat overall and down 0.1% on a like-for-like basis. Chief executive Steve Rowe described the performance as "encouraging" and said the business has made good progress with its plans to revive the division due to better product at lower prices, fewer promotions and two fewer clearance sales.

Gross margin in Clothing & Home was improved at 140bps which it said was down to leveraging its sourcing capabilities and offsetting currency headwinds.

Food sales were up 4.4% overall but down -0.1% on a like-for-like basis due to increased competition and total UK sales were up 2.7% and down -0.3% on like-for-like basis.

Rowe revealed, as expected, that he planned to ramp up the business' transformation plan which he first announced last year and which would involve the closure of 30 stores in the next five years and a reduction in space for Clothing & Home. In a statement to accompany the results Rowe said it would accelerate its UK Clothing & Home space rationalisation plan, move to become a "digital first" retailer and significantly reduce its costs.

"Our position in Clothing & Home has eroded over the last 15 years as online retailers, new international competitors and discounters have taken market share. However, the business retains very strong market positions in lingerie, schoolwear, denim, suits and other areas which illustrate our capability," Rowe said.

"In the next phase of our transformation we will continue to modernise our supply chain which needs to be faster and lower cost than today. Our digital fulfilment capability, while currently operating well, will require further investment to enable more rapid growth online and help us match increasingly fast competitor fulfilment rates," he added.

He said that it remained M&S' ambition to be the UK's "essential clothing retailer". "At all levels we are sharpening our ranges, to provide better choices with fewer options, and delivering contemporary wearable style to become more popular. With our heritage in value, we will reinvest cost savings into affordability to ensure that our quality is unrivalled at any given price point," Rowe said.

It is expected that Rowe will reveal more detail of the accelerated transformation plan throughout the day as he speaks with analysts and the press.