Marketing investment starts to pay off for M&S as clothing sales rise

Marks & Spencer is showing the first signs that heavy marketing investment in its clothing business is paying off as sales, particularly in womenswear, returned to growth. 

M and S Leading Ladies
Marks and Spencer recently unveiled a new ‘Leading Ladies’ brand ambassador line-up

The retailer took the unusual step of breaking out like-for-like clothing sales in the UK, which usually fall under its general merchandise division. For the 13 weeks to 29 March, M&S says sales at stores open for more than a year were up 0.6 per cent, while total sales increased 1.3 per cent, defying analyst expectations of a decline in sales.

Womenswear in particular performed well, with growth here outpacing its general clothing increases although the retailer did not break the figures out further. The sales increase is the first indication of progress at its clothing business and comes despite the 11th consecutive quarterly fall at its general merchandise unit, which also includes homewares and footwear.

In general merchandise sales were down 0.6 per cent at stores open for more than a year, although this is an improvement on the 2.1 per cent decline seen in the prior quarter. Total sales increased 0.2 per cent.

Marks & Spencer has spent heavily on promoting its clothing business, launching high-profile marketing campaigns including “Leading Ladies” and investing in the in-store and online experience. In February, the firm unveiled a new website that brings content to the fore, adding lifestyle and style tips, news and celebrity features.

Total sales at M&S.com were up 12.5 per cent despite the firm reducing marketing activity to ensure a smooth transition from its old Amazon platform to the new site. It plans to launch a new marketing campaign to promote the site in May, which it claims should help to boost the rest of its general merchandise business. Around a third of its homeware sales are made via the website and these were hit by the lack of promotional activity online.

Despite the sales growth at its clothing business, analysts estimate that M&S is still underperforming the market and continues to cede share to rivals such as Next. Neil Saunders, managing director at Conlumino, says the retailer will now need to build on this quarter of growth with more “radical” reforms of the fashion business if sales are to improve further.

“Just as one swallow a summer does not make, one good set of results a sustainable recovery does not indicate. With today’s results, M&S is, at long last, showing some green shoots of recovery. This will bring both relief and a much needed breathing space for the top team at M&S and will, hopefully give them the confidence to move forward,” he adds.

Concerns also remain over discounting, with M&S highlighting that due to the “highly promotional market”, particularly over Christmas when M&S ran a number of promotions, gross margins at its general merchandise business will have declined in the second half, pulling down its full year gross margin and profits.

In food, sales were basically flat, although M&S did manage to continue its run of 18 consecutive quarters of growth with sales up 0.1 per cent on a like-for-like basis and 2.5 per cent in total. Saunders describes the numbers as “respectable”, especially given the backdrop of a grocery market that is barely growing and tough comparables with last year, when Easter fell in the period.

M&S warned that its outlook remains cautious and that its focus remains to “transform into an international, multichannel retailer”. The retailer recently unveiled plans to open 250 stores outside the UK over the next three years.

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