18 Aug 2020
Posted in Retail
Significant job cuts at M&S as it attempts yet again to transform the business
Following today’s release of Marks & Spencer Q1 figures for 2020/21,
Kate Ormrod, Principal Retail Analyst at GlobalData, a leading data and analytics company, comments:
‘‘Having strived to turn around the business for so long, COVID and its resultant shopping habits have forced M&S’s hand to make more drastic changes, with headlines today focusing on the retailer’s history-making 7,000 job cuts over the next three months as it battles with the shift to online. A revenue performance ahead of its scenario plans is somewhat encouraging however given the trading turbulence experienced on the high street caution is rightly the overriding mind-set at M&S, especially given the hard work that lies ahead.
It is no surprise that Clothing & Home remains a drag on the business, as consumer desire for clothing in particular remains subdued by a sparse social calendar, with sales halving over the 19-week period, though the decline softened to 29.9% for the last eight weeks. The contrast between stores and the online channel remains stark with C&H sales falling 47.9% in those eight weeks, versus online growth of 39.2%, resulting in online accounting for 41% of sales. This digital penetration still remains behind rival Next however, and M&S undoubtedly has a harder road ahead to meet heightened shopper expectations when it comes to delivery, as it plays catch up. Though M&S has reported an extra 1.9 million C&H online customers in 2020, there are many more to entice online, particularly older shoppers, to repair its overall trading performance.
Food remains an outperformer, with 2.5% growth over the eight weeks to 8 August, and l-f-ls (excluding the closure of hospitality and travel franchise units) rising 10.6%. While its appeal prevails, aided by its investment in value for money, it has lost out to other grocers amid the pandemic. All eyes are on M&S’s venture with Ocado, which launches next month, as this will prove pivotal to the retailer’s attempts to move away from being a laggard to a player capable of real change.”