Marks and Spencer’s chief executive Marc Bolland has suggested that the UK retailer’s positioning has allowed it to buck industry trends – and insisted that its offer has been well received in the face of decreased consumer confidence.
He said today (6 April) that all of the retailer’s consumer data tells it that “the product we bring out against the value we bring it out against is very well positioned”.
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However, speaking to journalists after the retailer recorded a more than 2% increase in total sales for its fourth quarter, Bolland was realistic about its prospects for the year ahead. “We have seen that it has been an increasingly difficult one so therefore we’re not bullish at all, we’re very realistic that the next financial year will be an increasingly challenging market,” said the M&S boss.
During the fourth quarter the retailer’s food division recorded a 4.9% increase in sales for the period and like-for-like sales in the food division were up 3.4%.
Bolland played down the impact of the decrease in consumer confidence in February and March, saying that while it has fallen, it did not, as some people have said, “come off a cliff in March”. Consumer confidence is “low but stable”, emphasised Bolland.
“We have not seen a negative impact after the budget. We have seen consumer confidence, is low, which is not great, but we believe that for the next year the customer will be in an even more difficult situation, as for us there will be in increase in commodity prices, but they will have less discretionary spend.”
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By GlobalDataBolland claimed that the retailer’s food division is bucking trends in terms of basket size, confirming that in its most recent quarter, basket value, size, and number of transactions have increased, attributing the growth to its “high-quality offer” and innovation.
He said that the retailer’s healthy lines have “performed well” during the fourth quarter, holding a “market-leading position” in ready meals, claiming its Count on Us range is the biggest health product in the country, and its Simply Fuller Longer in the second largest. He also highlighted the strength of the retailer’s fresh food offer, adding that fresh fish sales were up 17% during the quarter.
Describing the retailer’s recent innovation strategy in its food division, Bolland said that in the last year it has changed over 1,800 lines in its stores, and that around 25% of what it offers now is different from last year. “So what we’re offering is a level of quality and a level of newness that is completely different to what you’d find at supermarkets,” said Bolland.
According to Bolland, M&S’ inflation levels are below that of the wider food sector. “What we have seen is if you look at compound inflation on the food side it’s around a 4% run rate in the industry. We are actually below that. We see a 2% increase in there. Therefore our inflation is mitigated by store prices and promotions.”
Commenting on the retailer’s results, Verdict analyst Maureen Hinton said that Bolland has followed former CEO Sir Stuart Rose’s “tradition of coming out with better figures than the market was predicting”.
She also suggested that the retailer’s position among more affluent customers positions it well for the coming year. “The increases in household expenses and the prospect of unemployment hit the young family, and those on lower incomes much harder than the M&S core customer which tends to be older and more affluent and has already adjusted to hard times. Therefore, though the retailer predicts this year will be tough, M&S is in a much better position to weather the storm than others,” said Hinton.
Shares in the retailer were up 5.67% at 11:47 BST today to 359.5p a share.
