Marks & Spencer posted a 2.0% increase in underlying profit in the third quarter of its financial year, however, group revenue, at £4.97 billion, was 3.1% lower than the same period last year.
Commenting on the retailer's performance, chief executive Steve Rowe said that plans to turn M&S into a "faster, more commercial and more digital business" are progressing well.
"Against the background of profound structural change in our industry, we are leaving no stone unturned, and reshaping our business, its organisation and culture," Rowe explained.
Here's how leading analysts viewed the retailer's performance.
Russ Mould, AJ Bell
"The world’s most frustrating recovery story continues to limp along, with no end in sight for when the business will truly be fixed. Food has been the weakest part over the past six months, with a 2.9% decline in like-for-like sales, partially blamed on reducing prices and removing ‘complex and confusing’ promotions. Strategically, that looks to be the correct decision, up to a point.
"Marks & Spencer needs to live up to its reputation of quality products while also being more competitive on pricing. However, one has to wonder if there is a risk in the business swinging the needle too far towards budget territory."
Martin Lane, Money.co.uk
"M&S simply haven’t been able to keep up with the times, and this is really affecting their sales. With both clothing and food sales falling, they really need to do something to expand their customer base and engage new, loyal customers.
"The high street in general is suffering, not just M&S, so it’s easy to see why they are focusing on getting their online offering up to scratch and giving consumers what they want. It will be interesting to see whether this will mean more store closures in the near future. Their signature luxury products are being undercut by bargain supermarkets at a fraction of the price. Shoppers expect quality and convenience for less than ever before, and M&S just aren’t offering that at the moment."
Clive Black, Shore Capital
"M&S was frankly characterised by Archie Norman, its chair, as a ‘burning platform’ at the group’s FY2018 AGM, back in July 2018. Whilst all analogies break down eventually, the stark description is one that highlights the seriousness of the group’s situation and the need for considerable change, starting with the culture. In our view, a burning platform tends to take some time to put out and make fit for purpose.
"So, we must start our consideration by once again reiterating that investors in the group’s shares need to display ongoing patience, before the current transformation programme can be expected to yield demonstrable and
sustainable change. Time will tell if the material adjustment to the group’s senior management team over the last year or so represents the arrival of the fire brigade."
Steve Dresser, Grocery Insight (via Twitter)
"The legacy issues are extensive at M&S, and one has to shake their head silently at what Steve Rowe inherited.
"A business the size of M&S is fundamentally reshaping everything – process in DCs, digital catch-up and change in culture – sums up where the business was going. [...] It feels like they have a plan, but delivering that plan with the economic backdrop is tough."
© 2018 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: European Supermarket Magazine.
