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

China still dominates apparel sourcing

The latest full-year data on US apparel import trends for 2017 suggests China will remain the dominant sourcing region for some time to come....

BLOG

Retail's rapid transformation requires "platform thinking"

There’s no doubt the retail industry is undergoing rapid transformation as technology continues to reshape how retailers think about their supply chains and meeting their customers’ needs. But to posi...

BLOG

NAFTA trade talks inch forward

Negotiators are meeting this week for the sixth round of NAFTA trade talks – and as soon as this deal has been repackaged, the spotlight could turn to the US free trade agreement with Central America....

BLOG

How can apparel firms stay competitive into the future?

Continuing with the publication of our Outlook 2018 reports last week, we looked at what apparel firms should be doing now if they want to remain competitive into the future....

just-style homepage



Forgot your password?