Marks and Spencer started this week on a cheery note with the launch of its Christmas advert – but the festive feel didn’t last long for the high-street stalwart.
The new advert sent Twitter into a tizzy on Tuesday with some viewers convinced that one of the characters was mouthing a swear word in a scene with kids’ favourite Paddington Bear. The same day rumours of its chief financial officer Helen Weir’s departure starting doing the rounds.
Yesterday began with M&S confirming Weir’s exit while also disappointing investors with a warning about the growth of its previously rock-solid food business. Like-for-like food sales for the six months to 30 September dropped 0.1 per cent, with M&S boss Steve Rowe warning headwinds have “intensified as competitors have encroached on some of our space with the rapid growth of convenience”.
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The bright spot in M&S’ results was, surprisingly, an increase in full-price clothing and home sales, a division that has been a sore point for the retailer over the years. No doubt retail veteran Rowe has had to spin a lot of plates to make his turnaround plan work but stitching up the clothing division at the cost of the food business is a risky long-term strategy.
Rowe’s push into an online trial for grocery deliveries could also prove to be an expensive adventure as analysts point out that M&S isn’t really where consumers go for their weekly shop. Add to that the likes of Tesco and Morrisons upping their premium label game, which has historically been M&S’ strong suit, and Amazon-Whole Foods threatening to eat retailers’ lunches. The rising pressures on consumer spending and squeezed margins don’t help either.
It’s probably with these factors in mind that Rowe announced yesterday M&S will open fewer Simply Food shops than expected – a decision welcomed by analysts recognising that sometimes it’s better to take a step back in order to take two steps forward. But with M&S still being one of the most shorted companies in the FTSE 100, Rowe needs to ensure his radical plans deliver.
Be it making the clothing division fashionable again or beefing up the food arm, investors will be closely watching whether this Christmas will be a merry one for M&S.