Marks and Spencer (M&S) plans to “reposition” its food offer and slow its Simply Food store opening programme as it seeks to grow in the increasingly competitive market-place.
Revenues in M&S’ food division rose by 4.4% in the 26 weeks to 30th September, despite competitors “encroaching” on its space, the booming online delivery market and value-driven consumers.
The challenging market environment also saw it run more promotions and launch over 750 new products in the period, with sales of its Spirit of Summer products growing by 20%.
The business also opened 24 new Simply Food stores, but first half like-for-like revenue was down 0.1% and its gross margin fell to 31.3% due to increased costs and minimising price rises for shoppers.
“The headwinds facing our Food business have intensified,” chief executive Steve Rowe said.
“Therefore, although our investment returns remain high, we are slowing our Simply Food opening programme as we reposition our food offer for future growth. Only the highest returning sites will qualify for addition to our store portfolio.
“We have already sharpened prices in core categories and will be taking further steps to bring out value in our ranges. We will increase the pace of relevant innovation, step change our availability and ranging, and continue to develop our Foodhall proposition.”
Overall, M&S reported a 2.6% growth in group revenue to £5.1bn and a 371.3% rise in pre-tax profits to £118.3m.