Analysis: Will M&S survive after its first loss in 94 years?
When, six months ago, Marks and Spencer outlined its ‘Never the Same Again’ strategy, it should have added an extra section: ‘Never Like This Before’.
Today, for the first time in its 94 years history, the high street stalwart announced a loss - a significant milestone for any business.
In its six month results to the end of September, the firm reported a loss of £87.6 million, compared with profits of £158.8m in the same period last year, when the idea of a global pandemic which would shutter physical stores for three months and all but close down international travel and face to face meetings, was unheard of.
However, it has been a year of firsts in the retail sector. Earlier this year John Lewis did not award a partner bonus for the first time since the aftermath of the Second World War - and just today announced it would slash 1,500 head office roles.
None of this is a surprise - these are unprecedented times. It has been a turgid period for retailers, not least M&S, which in August announced it would cut 7,000 jobs UK-wide.
The brand, the darling of the British high street, has had to make quick changes. It is to restructure its clothing ranges, not just to reflect the lower demand - people are spending less on new threads when the biggest social event of their week is via computer monitor - but also to cash in on a call for more casual clothing as more people work from home.
It is not all doom and gloom for the retailer, however. The business has actually performed better than expected during the first half with revenue down 15.8 per cent, outperforming the firm’s original Covid-19 planning scenario by 22.8 per cent. M&S – which at one time rested on its laurels of being the traditional retailer the shopper could rely on never to change – has had to adapt, and under chief executive Steve Rowe, it has begun to do just that.
Its food business has achieved 2.7 per cent like for like growth, which rises to 6.7 per cent, when excluding hospitality, such as the provision of its office sandwich platters, which was all but closed during lockdown. The feat is impressive when you consider the amount of cash generated by commuter-driven sales, such as on-the-go lunches at railway stations and airports - and the trade from office workers who then spent the vast majority of their day in the city centre.
Foodwise, it has launched its Remarksable value range - akin to Waitrose’s Essential range and similar in style, if you consider chocolate chip brioche to be a budget staple. Its tie-up with food delivery service Ocado has boomed since it launched in September, taking over where Waitrose left off.
So, while announcing its only loss in almost 100 years must come as a blow to M&S, as the strategy goes, things will be Never the Same Again. And in the long term, that could actually be a good thing.