Blog: Leonie BarrieM&S battens down the hatches

Leonie Barrie | 2 October 2008

Just like its customers, Marks & Spencer is battening down the hatches and hoping to ride out the downturn.

The retailer, which posted second-quarter trading figures today, said it plans to cut capital spending by up to GBP200m (US$352m) – that’s down to GBP700m this year and GBP400m in the 2009-2010 financial year – slashing its unpopular store modernisation programme and focusing instead on improving its supply chain and information technology systems.

Even though its cash-strapped middle-market shoppers continue to trade down to discount alternatives or buying fewer items, M&S results were broadly in line with expectations.

Second quarter like-for-like sales in the UK were down 6.1%, and like-for-like general merchandise sales, which includes clothing, fell 6.4%. Most recent trading, in the 13 weeks to 27 September, saw clothing sales down 3.5%. Perhaps most importantly, management maintained its full-year dividend.

That said, profit margins are coming under pressure via increased price-cutting, with UK gross margins expected to fall 100 basis points this financial year.

But in the run-up to what’s likely to be the worst Christmas for at least 30 years – and as a measure of just how tough the markets have now become – if the retailer can get away without any more downgrades for the full year it will be off the hook... at least for the time being.


UK: M&S cuts capital spending as Q2 sales drop 6.1%


Ethiopia unrest a sourcing risk?

Fashion retailer H&M and UK based glove and leather manufacturer Pittards both say they are monitoring the situation in Ethiopia closely after the country's government declared a state of emergency af...


Asia facing up to increased competition

Increasing competition for garment sourcing contracts is seeing China not only being challenged by other countries in Asia, but by sub-Saharan African and even Russian suppliers too. And it is pushing...


Cambodia raises garment worker wages

The monthly minimum wage for workers in Cambodia's textile, garment and footwear sector is set to rise to $153 from January next year, following a vote on the issue last week. The increase marks a ris...


Sportswear initiatives start to take shape

The results of two highly-anticipated initiatives in the sportswear sphere were revealed last week: the launch of Under Armour’s new UAS lifestyle brand and the first pair of running shoes created at ...

just-style homepage

Forgot your password?