M&S to tailor its offering for the high street

Fleshing out some details of the group's localised strategy first announced in November, chief executive Marc Bolland said Marks & Spencer would break away from its uniform template by customising the offering at some stores on the basis of local demographics such as prosperity, age and ethnicity. Trials are set to begin in October.

"If we are in an area that is kid-rich and is highly affluent, then that store will get more space for the kidswear department," Bolland told journalists yesterday. Local competition and regional characteristics will also be taken into account.

"We have to make sure we give proportionately more to what the catchment area has," Bolland added.

Marks & Spencer, which has 47 stores in Scotland, said it would confirm the sites for trial locations later this year. The company will also experiment with new layouts and signs in some stores which customers have identified as "difficult to shop".

Bolland said the company had made a good start to the new financial year, helped as many retailers were by fine weather and an abundance of holidays throughout April. However, caution is still the watchword for the year as a whole, as consumers' disposable income continues to be eroded by high inflation, uncertain employment prospects and marginal pay rises.

Pre-tax profits of 781 million for the year to 2 April were broadly in line with analysts' expectations, as Marks & Spencer increased its share of both the UK clothing and food markets. Unveiling his first set of year-end figures since joining from Morrisons in May 2010, Bolland said Marks & Spencer had achieved this by offering both "great quality and value".

Stripping out the effect of one-off items and an extra week of trading in the previous year, underlying profits rose 13 per cent to 714m on sales of 9.7 billion.

Gross profit margins on sales of clothing in the UK, where M&S has 11.7 per cent of the market, fell during the year but were offset by improved margins in food. One area of focus for Bolland during the past year has been the addition of new food ranges, with 1,900 lines launched during the past 12 months.

Analysts said the company had also been helped by a better-than-expected performance from its international arm, with sales by its 361 overseas stores reaching 1bn.

Despite continued weakness in certain markets such as Ireland and Greece, Marks & Spencer aims to increase its international selling space by about 10 per cent this year.The group has been focusing particularly upon central and eastern Europe, as well as India and Shanghai.

Shares in the group, which have risen nearly 15 per cent during the past quarter, gave up some of those gains yesterday as investors paused to ponder the impact of continued belt-tightening by consumers. The stock finished yesterday's trading down 11.4p at 385.6p. A proposed final dividend of 10.8p, makes a total of 17p for the year.