Marks and Spencer gets tough

Chief executive Steve Rowe says the group is still in the first phase of its transformation plan, known as ‘restoring the basics’ (no nod to Sir John Major). But he admits there are “a number” of issues to address and that a new organisational structure won’t fully be in place until July. It’s Mr Rowe’s belief that customers will visit other branches if their local shop closes. And close they will: one in three of the retailer's clothing and home stores is scheduled to disappear from the high street within four years. 

Harsh medicine is warranted given the steady decline in footfall. Sales across clothing and home fell 1.9 per cent last year on a like-for-like basis, with the rate of decline accelerating through the fourth quarter due to - you guessed it - "unseasonal weather conditions". Action has already been taken on the supply base, increasing direct sourcing and limiting promotions, but the planned closures suggest management is now reconciled to the primacy of digital channels.   

Underlying food sales also came up short of the 2017 comparator, but registered a 3.9 per cent improvement in absolute terms following the opening of 62 new Simply Food locations. However, intensifying competition led to a deterioration in food gross margins, which contracted by 140 basis points. Food bosses are committed to cutting costs, boosting volumes and tackling issues around product availability and waste, but we're left wondering if M&S hasn't simply become reactive to trends in the convenience store market, rather than driving the narrative itself.