M&S hails first-half progress in fashion at home and abroad
M&S has been continuing its long-awaited recovery in recent months and its half-year results for the period to October 2 on Wednesday showed just how far it has come.
Giving its figures on a two-year comparison basis, it said total profit before tax and adjusting items rose to £269.4 million from £176.3 million and pre-tax profit rose to £187.3 million from £158.8 million. Revenue rose 5% to £5.1 billion and net profit was £159.9 million, up 30.6% compared to two years ago.
Not that everything was perfect as Clothing & Home (C&H) sales fell 1%, although full-price sales in this crucial division were up 17.3%. And importantly C&H operating profit before adjusting items rose to £156.2 million from £109.6 million.
C&H increased its “value and style perception” with “market share growth across key categories and channels”.
CEO Steve Rowe said: “Given the history of M&S we've been clear that we won't over-claim our progress. But… it is clear that underlying performance is improving, with our main businesses making important gains.”
Looking specifically at the C&H unit, M&S said better products and its omnichannel strategy delivered a sharp uplift online and that aforementioned healthy growth in full-price sales.
And that 1% drop in total C&H sales might not be as disappointing as it looks given that lockdown accounted for one week of the latest period, so the comparison to two years ago actually seems much better. Sales also grew in Q2 and online market share increased 1.1 percentage points in the 12 weeks to 19 September.
ONLINE POWERS AHEAD
Online sales represented 34% of C&H sales in the period, well on the way to its target of over 40%. Online active customers increased by 60% compared to two years ago, to 9.6 million, and retention rates are rising.
Its C&H store sales declined 17.6% as the 'legacy' store base meant it was impacted by the enduring weakness of city centre and high street trade. Stores on retail parks were level with two years ago, while city centre sites declined 32.1%. But store market share was up 0.8 percentage points in the 12 weeks to 19 September.
The company also said more focused category management has enabled total option count to be reduced by around a quarter compared with three years ago, meaning a substantially improved line-item rate of sale. In its 'hero' category of women's denim, sales per option were up 56% on two years ago from 29% fewer options.
And it has broadened choice in growth areas such as activewear, kids' daywear and home. The Goodmove activewear brand has seen “very rapid growth” since its pre-pandemic launch and its girls' daywear market share has grown by 160bps.
Importantly too it has narrowed the window between orders being placed and deliveries in womenswear.
Its brands strategy is showing early signs of its future potential too. The average online basket size for brands is more than twice the average for M&S.com with brands contributing around 3.5% of total online sales in H1.
The firm also said it’s making good progress on the store rotation programme set out in May. “Initial results from new full-line store openings have been encouraging”. The pipeline of new full-line stores has grown to 20 and now includes six former Debenhams sites, in addition to Leamington Spa, which opened in the period.
Meanwhile, the International business also grew online sales, both in markets with M&S stores and on marketplaces. It has an ambition to double the International online business over the next three years. In the first half, sales increased 142% against two years ago. Growth has been driven by the Republic of Ireland and India, broadening the number of markets with an online presence and rapid scaling of its wholesale relationship with Zalando marketplace. The C&H store business in the Republic of Ireland has seen rapid recovery following reopening.
And the firm said total trading for the first four weeks of H2 has been consistent with growth rates reported in Q2 and ahead of plan. Its central case is for profit before tax and adjusting items for the full year to be ahead of expectations and in the region of £500 million.
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