Marks and Spencer’s food business is performing “ahead of the competition”, chairman Sir Stuart Rose has claimed, after the UK retailer enjoyed its first rise in annual grocery sales since 2007.
Rose, who is planning to step down after six years at the helm of the business, said the retailer was benefiting from promotions and innovation designed to lure back consumers.
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While other UK retailers may have benefited from food inflation and adding store space, M&S said its underlying food business was sound.
“Our latest like-for-likes are ahead of the competition,” Rose said yesterday (25 May). “Our volume growth has been toward the top end of the market.”
Unveiling its full-year results, M&S reported a 0.3% rise in like-for-like food sales, which contributed to a 0.9% increase in like-for-like sales across its UK business.
Rose revealed that the retailer’s promotions and lower prices on food had cost the company around GBP200m (US$288.2m) in profits but added: “We have invested a lot in margins but we did that to keep the faith of our consumers.”
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By GlobalDataM&S’s food margins fell by 95 basis points in its last fiscal year, leading to company margins to dip 5bps. Finance director Ian Dyson said group margins would be “broadly flat” in fiscal 2010/11.
M&S’s management was cautious about the year ahead but insisted the company was well-placed in a UK economy set for slow recovery.
“The good news is that confidence has recovered from the very low level of the previous year but the outlook is uncertain. We’ve got a Budget coming up and, what is certain, is that consumers will have less pounds in their pocket,” Rose said.
However, Dyson added: “While the outlook remains uncertain, we do believe we are well-placed to make further progress.”
Yesterday’s publication of M&S’s annual results and briefing in the City marked the start of a period of significant change at the top of the retailer.
Rose has indicated he will step down as chairman by March, while Dyson will leave M&S at the end of August to join pub group Punch Taverns as chief executive.
Marc Bolland, who started his reign as M&S chief executive at the start of the month, spoke briefly to reporters and indicated his belief in the business.
“From 2004 to today, I see that Stuart and the team have done a very good job,” Bolland said. “The company is really special. I cherish the heritage and the values of the company.”
However, the ex-Morrisons boss was coy about his plans for M&S, insisting he was part-way through an “induction” to learn more about the business and would report his findings in the autumn.
Bolland said he had already visited distribution facilities in the UK and stores in Greece and Turkey – as well as working for a day in one domestic outlet.
