The latest turnaround plan of the British retailer Marks & Spencer is showing signs of being able to deliver results as the retailer raised its profits outlook recently following a surge in demand and sale for its food products and a growth in demand for online clothes’ orders.
The company said that it believed that the surge in demand was more than just the reflection of pent-up consumer demand that was experienced after months of lockdowns because of the Covid-19 pandemic which prompted the company to upgrade the profit forecast. This pushed up the stocks of the 137-year-old chain, one of the biggest brands on the British high street, by almost 12 per cent.
As a part of the rebound strategy, the company has been striving to improve the quality of products and making large investment in technology and e-commerce which helped the clothing and home division of Marks & Spencer to report double revenues in the 19 weeks to August 14 from a year earlier and was only about 2.6 per cent than pre-pandemic levels of 2019.
There was a 10.8 per cent year on year jump in revenues from food products of the company and 9.6 per cent compared to the previous year as the company benefited from cost reduction programmes which helped the company to offset inflation and disruption in the supply chain because of labour shortages.
“Assuming no further COVID-related restrictions on trading, at this early stage we expect adjusted profit before tax for the year to be above the upper end of previous guidance of 300-350 million pounds ($409-$477 million),” M&S said in an unscheduled statement.
The financial numbers released by the company clearly indicated success of its new strategy while the executives of the company had been stressing for months now that trading was improving. The company’s chairman and CEO both have stressed in recent months that the true performance of the company was being hidden by the pandemic.
While reshaping its store estate, the company which is renowned for providing school uniforms in Britain, first suits for jobs and upmarket food and entered into a joint venture with online supermarket Ocado.
Its website now offers customers third-party clothing and footwear brands which has driven up traffic to its website and lure in new customers, the company said. The company also undertook fewer promotional campaigns and included more focused ranges and a smaller summer sale.
While there was a 19.8 per cent decline in store sales for clothing and home compared to pre-pandemic levels, the company reported a 61.8 per cent rise in its online sales.
(Adapted from Reuters.com)