Steve Rowe, British Marks & Spencer‘s CEO, has unveiled a new strategy that should help revitalize clothing sales. He intends to lower prices for more than a third of its product range.
No improvement in sight
Aside from price cuts, more than 10 % on average, the company will also cut down on in-store discounts. Rowe also wants to limit its product range, to make its stores appear less “messy”.
Investors’ reaction to the news was rather lukewarm, as they feel there are too few actual measures to improve Marks & Spencer’s clothing sales. Rowe’s statements could not prevent the company’s share to drop 7.8 %.
Last year, the clothing department’s like-for-like turnover dropped 2.9 % last year, while it will not improve this year either. Profit is also hit by the company’s investments. Marks & Spencer has been losing market share in the clothing business for the past four years.
Changes will only come this summer
Rowe’s announcement does mean Marks & Spencer will not be able to meet 2017’s profit forecast. Analysts’ expectations were even lowered 12 % compared to previous numbers.
Marks & Spencer only wants to tackle other problems within the company this summer. It still has huge issues outside of the United Kingdom, where profit plummeted 37 % last year, while it will need to lower its number of stores in its home territory.
Over the past quarter, Marks & Spencer’s turnover managed to grow 2.4 % to 10.6 billion pounds (13.9 billion euro), while pretax profit grew 4.3 % to 690 million pounds (909 million euro). Its food division performed well, but it still has not managed to increase its clothes sales.
