M&S is “starting to look terminal” – analysts react to the British brand’s results
M&S reported a "painfully weak" set of results this morning, according to analysts – so what is the future of the British brand that can't seem to get customers beyond the sandwich section?
Is Rowe the right fit? Analysts on M&S' clothing struggles
James McGregor, partner at consultancy Retail Remedy, said M&S need to stop blaming the weather for bad performance.
"The weather excuse is becoming as transparent as a white shirt in the rain," he said. "Weather affects sales, agreed, but the rest of the equation must really be addressed."
He said chief executive Steve Rowe now needs to "disrupt the customer on their journey to the food hall" and "take them completely by surprise" to make it clear why they should buy M&S clothes. As the stock has already been bought for next season, McGregor said the brand can only make a difference next quarter by getting the price right.
Richard Lim, chief executive of Retail Economics, said: "M&S' clothing figures are painfully weak and fail to stem the loss of market share to other more agile multi-channel competitors.
"Its tireless efforts to revive the struggling clothing business have failed to resonate with its core customer base."
Is the food hall saving M&S?
"The only brighter spot for the company is the food business managed to grow market share in a tough and rapidly evolving market," Lim said.
M&S reported a four per cent increase in UK food sales, but like-for-like sales fell by 0.9 per cent.
John Ibbotson, director of consultancy Retail Vision, said: "Fashion is on the canvas and even food has delivered a negative like-for-like. When that happens alarm bells really do start to ring."
McGregor was less pessimistic, saying "M&S food is strong" and that the drop in like-for-like sales "should not ring alarm bells".
"Seasonal timing was going to hit sales and they do have more innovation and further range expansion as their trump cards," he added.
The future of M&S: "starting to look terminal"
Ibbotson said: "Just when you thought things couldn't get worse for M&S, they did – and then some.
"Despite his best intentions, Rowe has not been able to stop the rot. Post-referendum caution among consumers, if it materialises, will only make things worse. Today's younger shoppers simply do not have the emotional bond with M&S that older people have.
"As hard as it is to say, the problems at M&S are starting to look terminal."
McGregor highlighted that Rowe had already flagged up that price cuts would hit margins, but added: "The trade-off needs to be in higher volumes.
"Price alone is not enough to attract back the promiscuous customer that has forgotten to look beyond the food hall."