M&S claims ‘unashamedly commercial’ Christmas ads paid off despite sales drop

Sales of both clothing and food were down at Marks & Spencer in the third quarter of 2018 which the retailer has blamed on a combination of low consumer confidence, mild weather, Black Friday and widespread discounting by rivals.

For the 13 weeks to 29 December, like-for-like food sales were down 2.1% and clothing & home sales down 2.4%, resulting in overall group revenue falling 3.9% to £3bn.

However, M&S claims its product-focused Christmas campaign – which the retailer’s director of marketing for clothing & home Nathan Ansell said it decided to take an “unashamedly commercial approach” on – worked well, with record sales across all advertised lines.

Marks & Spencer has no plans to return to blockbuster advertising this year, with the focus remaining on product and sales rather than brand.

During a press call this morning (10 January), chief executive Steve Rowe said M&S had “held its nerve in a very competitive market” and the business can see “early signs of encouragement” that it is on the right track to ensure the business has a long-term future. However, he said he “didn’t want to call it” on how long it might take to return to positive growth.

The decline in clothing & home reflected lower footfall to stores, partly as a result of  the increasing pace of closures. M&S also decided not to take part in Black Friday this year – something Rowe maintains was the “right thing to do” and despite John Lewis recording its biggest ever sales week in the period.

READ MORE: M&S ditches blockbuster ads for Holly Willoughby in digital-first Christmas campaign

It also reduced promotional activity in December by 37% and put 25% less stock into the sale, making it the smallest Christmas sale M&S has had in a number of years.

UK online sales grew above the market average and was up by 14%, which boss Steve Rowe said highlights the need to accelerate its store closure programme and shows it is on track to move a third of its business online within the next three to five years.

Rowe said Holly Willoughby has also helped to attract a younger audience to its clothing & home business with the ‘Must Haves’ ad campaign and range. Womenswear online growth “significantly outperformed,” he added.

Within food, where deflation was 2%, M&S said customers responded well to its Christmas ranges and campaign, resulting in “solid volume growth” over the Christmas period with the majority of stores delivering like-for-like revenue growth.

Bryan Roberts, global insights director at tcc global, says the “disappointing” set of numbers signals that the turnarounds in both general merchandise and food have a way to go.

“We have been heartened by some of the self-help measures M&S has put in place for food, such as simplifying the range and promotional structures, and seeking to reduce base pricing,” he says.

“However, there must be a degree of concern that many competitors have at least partially closed the gap in terms of innovation and premium private label.”

M&S will continue to cut prices across food and clothing & home until the Spring.