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

US border tax a contentious issue

Fresh from their disappointment at seeing the Trans-Pacific Partnership (TPP) free trade deal abandoned last month with an executive order by President Donald Trump, the US apparel and footwear sector...

BLOG

Primark's sustainable cotton programme takes shape

With the ultimate aim of ensuring all the cotton in its products is sourced sustainably, value clothing retailer Primark is adamant that having a business model focused on offering the lowest prices o...

BLOG

Trump administration starts to shake up trade

Last week we marked the inauguration of Donald Trump as the 45th president of the United States by taking a closer look at what's at stake for the textile and apparel trade – especially his promises t...

BLOG

Likely shifts in the sourcing landscape in 2017

Continuing our look at what lies ahead for the apparel industry and its supply chain in 2017, the panel of industry experts consulted by just-style last week tackled likely shifts in the sourcing land...

just-style homepage



Forgot your password?