Revealing profits of more than£1 billion for the first time in a decade, chief executive Sir Stuart Rose said developing the better and best ranges would be at the heart of the next stage of his revival of the business.
“We’ve been successful at driving gains in good, but there are big opportunities in better and best,” he said. The proportion of opening-price-point product in the M&S general merchandise mix rose from 12 per cent in 2004 to 30 per cent last year, but Rose said he wanted to push this figure down slightly.
He said the Autograph, Per Una and Limited Collection brands accounted for£1 billion of sales and are growing faster than the core business. He said Autograph alone could double sales to£600 million and be stretched to include non-fashion ranges, such as flowers and dedicated gift shops within stores.
The plans came as M&S revealed adjusted pre-tax profit for the year to March 29 up 4.3 per cent to fractionally more than£1 billion on sales up 5 per cent to£9 billion.
UK like-for-likes fell 0.5 per cent, but the slowdown began to bite in the final quarter with a 1.7 per cent decline and general merchandise down 3.1 per cent.
In food, M&S is to introduce branded goods for the first time. 350 lines, such as Marmite and Weetabix, will be tested in 19 stores in the Northeast from June.
Rose said the move was in response to demand. “We have customers saying: ‘I have to do two shops because you don’t stock these products’,” he said.
Non-food branded products, such as cosmetics are also under consideration.
Rose said that the company will look more at offering value in food, with a focus on price for key items and increased promotions. He hinted that the retailer was paving the way to offer food online with gift food and wine. “There is absolutely no commitment to an online food business, but we do recognise that’s where the market is going,” he said.
Rose said he expected the market to continue to be tough, but that he did not know how long the downturn would last.
He confirmed that M&S is cutting back its refurbishment programme, with 10 per cent of the estate to be refitted this year, not 20 per cent as planned. However, 5.5 per cent more space will still be added in 2008/09 and the aim remains to add 15 to 20 per cent more space in the next four years.
Analysts were concerned at M&S’s high level of inventory. “We believe M&S is significantly overstocked,” said Credit Suisse analyst Tony Shiret.
On the downturn
“People told us in January it was an M&S problem - it’s not. 70 per cent of what’s happening now is that there’s a slowdown.”
On passing the£1bn profit mark
“We see£1bn as the start not the end. It’s all about taking this business forward in the future.”
On introducing branded food
“I’m a great aficionado of Tabasco. But you can’t buy Tabasco in Marks & Spencer
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