New style M&S is back on track

For much of the late 1990s, the British retail chain Marks & Spencer struggled to escape from its somewhat frumpy image, with, it has to be said, only a little success.

Throughout that period, it has been the company's food retailing business which has kept it going, with the chain's reputation for quality food keeping sales high while clothing sales continued to struggle.

But with the arrival of a new chairman, Luc Vandervelde, in 2000, M&S' fortunes began to recover, as the former Promodes chairman brought his not inconsiderable retailing experience to one the UK's best known chains.

That Vandervelde's efforts have borne fruit is clear from the company's latest results, which were released yesterday. The company reported a 30 per cent rise in first half profits to £287 million (€447.6m), well ahead of even the most optimistic forecasts and a 7.9 per cent rise in sales to £3.7 billion.

"I am pleased with the performance over the half year, which shows we are continuing to deliver on our promises,"​ said Vandervelde. "We are now in a position where we have achieved four consecutive quarters of positive growth. This has translated into good half year results, which is a further indication that we have moved from securing, to sustaining the recovery."​

While much of the recovery in the company's fortunes has come from an improvement in the core clothing business, helped by the addition of new lines such children's clothes sold under the name of top UK footballer David Beckham, there was also considerable improvement in the food retail arm, driven by continued product quality and innovation.

The recent decision to roll out more Simply Food outlets in the UK shows the importance that the chain places on its food business and the opportunities that that sector holds for future growth, in particular in the convenience sector. The company is planning to open a further 20 Simply Food outlets in railway stations throughout the UK over the coming year.

The trick now is to keep this momentum going as the UK economy slows. The company has already warned that profits will be reduced by the cost of introducing a new combined charge card and loyalty card later this year, but with the food business continuing to grow and buoyed by the double digit growth in clothing sales, M&S will go into the second half in a much stronger position than it has for several years and should end 2002/03 with further growth in sales and profits.