‘We might vote to leave the European Union. I better not buy that frock, then.” Sounds a tad contrived, but it was one of the cards Marks & Spencer played yesterday, that consumer concern over Brexit both before and after the vote last month contributed to a horrendous trading first-quarter.
Under new M&S boss Steve Rowe, who wants to woo back the vaguely Marmite-sounding “Mrs M&S”, like-for-like clothing and household sales slumped just a whisker under 9 per cent in the 13 weeks to 2 July. A stunning start, but not in the best way.
Never mind comparisons with Rowe’s predecessor Marc Bolland’s tenure from summer 2010 to earlier this year, this is the worst quarter since April to July 2005, back in the day when Stuart Rose was in the M&S hot seat after being parachuted in a year earlier to fend off a takeover approach from Sir Philip Green. Back to the future, then?
Rowe said the sales nosedive was also due to his decision to cut everyday prices and offer fewer promotions, which he believes is the right thing to do strategically even if tactically it takes a toll in the shorter term. But M&S has had a somewhat ambivalent attitude towards price for some time now under various bosses, and I can see that continuing in the economic circumstances we are in post-Brexit.
The dilemma is that the company has wanted to be cheap enough at the “entry point” level for consumers in order to stop the likes of Primark and Next etc stealing them, but without compromising M&S’s dowager status on the high street.
It is a difficult circle to square between quality and price, and sometimes City analysts must feel they are on a carousel following the business, returning to a view they thought they had left behind.
Under Bolland, a resurgent women’s clothing offer always seemed to be just out of sight, with tantalisingly glimpses of recovery followed by renewed disappointment until after six years he somewhat quixotically said that he was leaving M&S “prepared for the future”.
Well, the City believes the future is on hold. Profit forecasts are being downgraded. There is deja-vu in the air. Rowe is right to say that there is no silver bullet for the retailer’s clothing and home division. It will be a long haul. No change there, then.