Profile of Marks & Spencer: Focus on Clothing

22 pages, published in Issue 117, May-June 2005   Report price: Euro 395.00; US$ 520.00

Marks & Spencer is the UK?s leading clothing retailer. It has 375 UK stores selling clothing, food and household furnishings. It also has 43 company-owned stores abroad, mainly in the USA and Hong Kong, and 155 franchise stores in various countries. It accounts for almost 10.8% of UK clothing and footwear sales. Its food sales are almost as important as clothing but its share of the UK food market is smaller.

Since the late 1990s its sales and profits have fallen, albeit with some recovery, and it has lost market share. At one time Marks & Spencer was renowned for its steady progress, and for being the UK?s most profitable retailer. But it lost that standing. It gained a reputation for high prices?partly as a result of its policy of sourcing mainly within the UK. The stores became unattractive, the supply chain was inefficient, and the company was complacent. Discount clothing retailers gained ground, supermarkets became a major force in clothing retailing, and smaller chains offered more stylish clothing. Marks & Spencer also withdrew from most of its non-UK company-owned operations.

The company acknowledges many of its problems. It sources 90% of its clothing from outside the UK. Also it is working to improve the supply chain and the stores, and to provide the clothing that its core customers want. One of Marks & Spencer?s strengths lies in lingerie, where it accounts for over a quarter of the UK market. Another lies in selling clothes for over-45 year olds?although sales to the under-35s remain weak. The company?s sales and pre-tax profits, at £8.3 bn and £782 mn respectively in 2003/04, are still substantial. But progress has been patchy during its recovery phase. Clothing sales fell in 2004/05 and the company continues to face stiff competition.

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