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It’s not just M&S, it’s another bad week for retail

Emma-Lou Montgomery

Emma-Lou Montgomery - Fidelity Personal Investing

Today’s half-year results from Marks & Spencer clearly show the retailer is pulling out all the stops in a bid to turn its business around. It’s going head-to-head with the lower-cost supermarkets with hundreds of price reductions across its food range. It’s going after vegans, families, the health-conscious as well as convenience-food fans and those who like to cook a little.

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Then on the clothing side of the business it’s trying to win-back old loyalty with the relaunch of its failing Per Una range, as well as apparently hoping to compete, to some extent, with the fast-fashion industry, by speeding up its ranges and bringing down its prices.

At the same time it’s hoping to position itself as a digital first business, with the roll-out of free next day delivery and a new loyalty scheme on the way. 

It’s an exhausting mix; clearly taking the most successful elements of retail from everywhere else and trying to apply them to the M&S model.

This isn’t just a chaotic time for M&S, it’s a chaotic time for the whole retail sector. And it’s been in full flow for a few years already now and shows no sign of abating any time soon.

Retailers have had to adapt or die.  Those that haven’t been able to have hit the buffers - and there is now a whole roll call of once successful high street names that are already no more.

Some, like Primark and Boohoo, have captured the high street and online markets, respectively, with what appears to be just the right offering for customers today. 

Such is Primark’s success that it is single-handedly keeping its owner Associated British Foods afloat, when other, completely unaligned businesses owned by the conglomerate, are ailing.

Primark, which sells cut-price fashion from more than 370 stores in the UK, US and across Europe, is far and away the largest contributor to group profit; adding a hefty £913 million to the pot this year, up from last year’s £843 million. 

So it proves again, single-handedly, that there is money to be made from high street fashion. The likes of M&S just have to get their formula right.

Transformation plans, of the sort that M&S is neck deep in, are commonplace but they aren’t any guarantee of success either. Some retailers have reinvented themselves and struck gold. Others have just struck rock-bottom.  

Will M&S’s transformation work out? Time will tell, but today’s results are a mixed bag, to say the least. Overall, pre-tax profits fell by 17% to £176.5 million on total sales down 2.1% to £4.86 billion. 

The high street retailer said that while its food business was "outperforming the market", there had been issues in clothing and home. Like-for-like sales here fell by 5.5% during the six months to 30 September; worse than an expected 4.3% drop.

And based on the full-year guidance it has set out today, M&S certainly isn’t going to set the retail world alight any time soon. 

More on Marks & Spencer

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