Covid-19: M&S outlines eCommerce expansion plans following profit decline

Marks & Spencer (M&S) reported a 21.2% decline in profit for the year ended 28 March 2020, results the retailer partly attributes to the Covid-19 crisis, which developed in the latter stages of the period.

In the update, the retailer also outlined its plans to significantly expand its eCommerce capacity as it seeks to reshape the business in light of the pandemic. This includes in its food division following the acquisition of 50% of Ocado Retail last year, with switchover and synergy plans on track for 1 September 2020. It noted Ocado Retail delivered 40.4% revenue growth for the nine weeks to 3 May, adding it expects this investment to “drive volume growth for M&S Food”.

Overall, M&S recorded strong like-for-like revenue growth of 1.9% in its food business across the 52 weeks up to 28 March 2020. However, its clothing revenue fell by 6.2% in this period, and whilst its online clothing performance improved prior to the Covid-19 crisis in March, this was not as fast as the retailer was hoping. It said online clothing “is being reorganised under new leadership as part of the post Covid-19 programme”.

The grocer also plans to continue transforming its international business by focusing on eCommerce. M&S reported that online retail sales grew by 23% in this area in the full year results, which was supported by the launch of five new transactional websites.

Steve Rowe, CEO of M&S said: “Last year's results reflect a year of substantial progress and change including the transformative investment in Ocado Retail, outperformance in food and some green shoots in clothing in the second half.  However, they now seem like ancient history as the trauma of the Covid crisis has galvanised our colleagues to secure the future of the business.”

He added: “Whilst some customer habits will return to normal others have changed forever, the trend towards digital has been accelerated, and changes to the shape of the high street brought forward.”