Blog: Leonie BarrieA tale of two retailers

Leonie Barrie | 4 November 2008

It was a tale of two retailers – and the inevitable comparisons – when both Marks & Spencer and Primark released their results today.

With figures that mirrored the spending shift taking place amid the economic slowdown, M&S saw its first half profit slump by 34% to GBP297.8m as shoppers searched for better value at discount fashion chains like Primark, which in turn saw its full-year profit rise 17% to GBP233m.

While M&S has managed to hold on to its market-leading position in clothing – a 10.9% share is no mean feat given that like-for-like sales of general merchandise (which includes clothing, footwear and homeware) tumbled 6.2% – a look behind the figures shows this is M&S’ worst first-half performance since Sir Stuart Rose took the helm in 2004.

Its grip on the market’s top slot is also somewhat fluid, with growth in schoolwear, lingerie and children’s wear offsetting declines in its core men’s and women’s wear categories. UK clothing revenues overall fell by 3.5% in the first half.

The drop in clothing sales at M&S is in sharp contrast sharply to the performance at Primark, where like-for-likes rose 4% in the year, boosted by the retailer’s mix of high fashion products at extremely low prices.

Primark’s continuing upward trajectory also seems to throw water on the theory that customers will focus on quality and timeless buys when times are tough – and that if the price is right then they can still be persuaded to shop for clothing.

It also begs the question, of course, on whether M&S will be forced to emulate this price-centric model in an attempt to hold onto its own business.

M&S chairman Sir Stuart Rose yesterday acknowledged that “highly competitive pricing” is key, and hinted that there are plans to reduce the costs of hundreds of items.

It says it intends to work with suppliers to “mitigate the impact of higher cost prices and adverse currency movements” – which, as so often seems to be the case, translates as driving a tougher deal with the firms making its clothes.

 


BLOG

Why digital supply chains are top of mind

Confirmation that digital supply chains are top of mind for apparel industry executives came last week with the latest plans from global sourcing specialist Li & Fung....

BLOG

Navigating global political frictions and economic uncertainty

As a barometer of the issues top of mind for apparel sourcing executives, it is hard to beat the annual Prime Source Forum in Hong Kong. ...

BLOG

Trump and Brexit generate more confusion

Over the past month, Donald Trump and his team failed to offer any clear plan to ensure Americans would "Buy American, Hire American" - while the British government's attempts to clarify the specifics...

BLOG

Bangladesh works to resolve labour activist issues

The Bangladesh government was forced to respond late last week to pressure over its crackdown on labour activists after a number of global brands and retailers, including H&M and Inditex announced pla...

just-style homepage



Forgot your password?