UK's M&S reports 14% clothing & home sales growth in H1

The company’s UK clothing and home sales were £1,749.7 million in H1 of financial year 2022–2023, compared to £1,534.6 million in H1 of financial year 2021–2022.

For H1 of financial year 2022–2023, M&S’s UK clothing and home segment delivered robust growth with like-for-like (LFL) sales up 13.7 per cent compared to financial year 2021–2022. Full price sales participation was broadly level on last year and well above the historic average.

Store sales for H1 of financial year 2022–2023 were up 18.8 per cent compared to financial year 2021–2022. Growth was driven by stores in city centres and shopping centres, reflecting the return to more normal trading patterns, although high streets continued to lag. Online sales increased 4.9 per cent and were 32 per cent of total clothing and home sales, with continued strong growth in traffic and increased average order values, partly offset by higher returns rates.

The clothing and home business in total generated an operating profit before adjusting items of £171.4 million compared with £156.2 million in 2021–22, with last year’s result benefitting from £27.8 million of UK business rates relief. Strong first half net margins of 9.8 per cent reflect the rebound in store sales, a steady full price mix, and operating leverage due to sales growth.

The shape of buy has been improved, by removing duplication and deepening core product programmes while also investing in emerging growth categories such as kidswear and brands, the company said in a press release.

Womenswear grew sales 15 per cent in the period despite 5 per cent fewer options, and the overall business had 276 lines achieving sales over £1 million in the first half. Sales in these lines were up 25 per cent on 2021–22.

Womenswear generated particularly strong growth in dresses, which were up by more than 50 per cent and the ‘holiday shop’ also grew strongly.

Men’s formal shirts and smart wear were also up by more than half, reflecting improved availability and customers’ focus on key occasions such as weddings, while casual sales also grew.

The company has taken initial steps to unlock supply chain cost opportunity. Today, the clothing and home supply chain has an end-to-end cost to serve of c.15 per cent which affords a substantial opportunity for efficiency by transforming stock flow from source to shelf and rapid replenishment back to shelf for returns.

Furthermore, growth was driven by clothing and home sales in key markets including India, where revenue doubled following the effects of COVID lockdowns on the business last year.

M&S’s group profit before tax was £205.5 million in H1 of financial year 2022–2023, compared to £269.4 million in H1 of financial year 2021–2022, while the company’s statutory revenue was £5,538.2 million, as compared to £5,105 million for the same period.

M&S expects smooth flow of business as it enters what is traditionally its strongest quarter. In the second first four weeks of H2, the company’s clothing and home sales were up by 4.2 per cent and international sales were up by 4.1 per cent. Overall, M&S expects to deliver an adjusted profit before tax in FY23 for its main businesses, including Gist.

The company believes that it is highly likely that conditions will become more challenging in fiscal 2024. However, the far-reaching changes made over the past few years, together with a reinvigorated product offer and strong value for money credentials provide some insulation from the gathering storm. In addition, the M&S customer base has slightly advantaged demographics.

Under new leadership, steps are now being taken to accelerate migration into growth channels—online and high performing modern stores—whilst at the same time bringing forward plans to streamline the business and reduce costs. The combination of technology-driven efficiency gains, structural cost reduction, supply chain efficiency and simplification is targeted to deliver over c.£150 million of cost savings in 2023–24.

ALCHEMPro News Desk (DP)