Crisis at M&S as profits plunge to worst in four years

It is getting to be a familiar refrain for the beleagured high street chain. Profits down, prospects gloomy, customers confused by the brand. This is not what M&S is meant to be about.

Now the pressure is piling up on Chief Executive Marc Bolland to turn things around, after latest figures revealed a fall in pre-tax profits of 7 per cent over the last 12 months, to £658m – far lower than analysts had expected at the start of the financal year.

Investors are getting frustrated: profits have been sliding too far, and for too long, with clothing and homewares peforming particularly badly. Just food is bucking the trend, for it seems everyone loves an M&S sandwich and some fancy melting middle fishcakes. That kind of success, though, has not been mirrored elsewhere.

Now Marc Bolland has reshuffled his top team in the hope that some fresh thinking can achieve results. And it is clothing which needs the greatest attention, for in its bid to appeal to be all things to all men (and women), M&S has failed to find a connection with its core customers.

Nice food, shame about the clothes

Just step inside any store and it is not hard to see the problem. Fringed waterfall cardigans jostle side by side with elasticated waist trousers and directional suits by Autograph.

Its own-brand lingerie, surely the mainstay of every working woman’s wardrobe, is often badly displayed: multi-pack knickers and tights all crammed onto rails.

There have been few “must have” items, while the temptation to lower standards to compete with the likes of Primark and George at Asda has seen some quality issues emerge, disappointing even the most loyal customers.

The store’s new style director, Belinda Earl, has a strong pedigree at Jaeger UK and at Debenhams, where she helped to turn the store from frumpy has-been to the pioneer of designer collaborations.

Now she wants Marks to set its sights higher, admitting it has lost focus: “M&S is a brand which should be looking upwards for aspiration and we are determined to do just that.”

Glossy catwalk show

Last week saw the launch of Earl’s new clothing range, the autumn/winter 2013 collection, complete with a glossy catwalk show. The pieces were well received by the fashion crowd, with glowing reports of some of the key pieces.

And there was not a crimplene tracksuit in sight, as models showed off the animal-print inspired ‘Wild Opulence’, the ‘Dark Drama’ evening wear and, yes, a range called ‘London Calling’, with echoes of punk and grunge. Yes, grunge. At Marks. The press loved it; share prices rose.

But Earl insists she is not simply there to show off to the in-crowd. Her biggest promise is to listen to customers who feel the store has ignored them for too long.

M&S is a brand which should be looking upwards for aspiration. Belinda Earl, style director

Along with the new on-trend clothing, there is the new infrastructure to back it up in the form of a giant distribution centre in the east Midlands, which will be able to process a million items a day.

The man now in charge of the clothing division, John Dixon, is a long-time insider who oversaw the triumphant rise of the food business, which continues to prove itself, with rising sales for fourteen consecutive quarters.

Expensive proposition

That should enable M&S to guarantee next-day delivery, even same-day delivery by next year – something which should at least keep it worrying its rivals. The only area that remains lacking is food delivery, with no Ocado-style service to whizz those ready meals to a hungry public.

Online food delivery, however, would be a highly expensive proposition, with huge costs involved. Yet retailers insist that e-commerce is the future;

It will doubtless take time for the impact of Bolland’s changes to filter through: M&S will need more than a pink cocoon coat and some covetable leather biker jackets to transform its business outlook overnight.

Still, there is optimism on the horizon, which makes a change. Could it be too soon to crack open that £79.99 bottle of Pol Roger special reserve champagne?