Blog: Leonie BarrieM&S gets benefit of the doubt

Leonie Barrie | 31 March 2009

Investors appear to be giving M&S the benefit of the doubt, with shares rising 11.7% this afternoon after the company reported better-than-expected sales during its fourth quarter.

Even so, the figures don’t make for easy reading – and it’s perhaps a sign of just how bad things have got at the UK’s largest clothing retailer when a 4.8% drop in like-for-like general merchandise sales (which include clothing and footwear), and a 1.0% fall in UK clothing sales is seen as good news.

Compare this, though, with falls of 8.9% and 6.5% respectively in the third quarter, and it’s perhaps easier to see where the optimism is coming from.

There’s also the question of whether or not these are the first tentative steps towards a recovery. Executive chairman Stuart Rose says the retailer is putting right some earlier wrongs and has managed to cut costs by sourcing more efficiently without compromising quality or ethical standards.

He also believes the stores are attracting more mature customers with new lines like Portfolio, and says children’s wear has a market share at its highest level by both value and volume for seven years – although this is no doubt helped by the recent collapse of Woolworths.

But there are still concerns, of course – in particular how profit margins are likely to stand up against price cuts and, more worryingly, the impact of sterling's depreciation against the dollar. The retailer has already said it expects profit margins last year to be down by 1.75 percentage points.

The BBC’s business editor Robert Peston also argues that a structural change is taking place in the economy which will have profound implications on the retail industry.

He suggests that British households are saving rather than spending any disposable income they might have, and that taxes and interest rates will inevitably start to rise again. For retailers this ominously means that the lean years may have only just begun.

 

UK: M&S upbeat as Q4 sales fall 4.2%


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?