Marks & Spencer reports a 4.7% rise in clothing and home sales amid strong half-year group sales.
- The retailer faces a £120m cost increase due to raised National Insurance and minimum wage changes.
- CEO Stuart Machin criticises the government for lack of reform in the business rates system.
- Despite challenges, M&S plans to maintain prices while seeking £500m in structural cost reductions.
- Online and physical sales performance remains robust, with significant market share growth.
Fresh off a 4.7% rise in clothing and home sales in its £6.5bn half-year group update, Marks & Spencer is now contending with £120m in additional expenses due to new Budget measures. The Labour Party’s announcement of increased National Insurance (NI) employer contributions and a higher minimum wage sets the stage for this financial impact, with each change expected to add £60m to the retailer’s costs.
Stuart Machin, Chief Executive of M&S, expressed surprise at this ‘double whammy’, stating, ‘We are definitely not planning to increase prices, but it’s not easy and we will have to work incredibly hard.’ He emphasised the importance of maintaining value leadership while tackling the overall structural cost reduction target of £500m.
Machin expressed frustration over the government’s failure to reform the business rates system, highlighting that retail contributes greatly to the economy yet unfairly bears a significant portion of business rates. He noted that retail constitutes 5% of the economy but pays 21% of business rates and called for clarity on potential reductions previously pushed to 2026.
Despite the financial headwinds, M&S continues to see strong sales figures, notably driven by consumer confidence heading into the ‘golden quarter’. Online sales saw an 11.3% rise with the second quarter reaching a 16.5% climb, attributed to improvements in digital offerings. ‘We want to improve our proposition, our availability, our fulfilment and the app and web experience,’ Machin stated.
M&S’s womenswear led the growth, especially in basics and casual wear, achieving double-digit increases in the first half of the financial year. This momentum is buoyed by successful collaborations with figures like Bella Freud and Sienna Miller, leading to sold-out collections shortly after release. The retailer is also set to open a new clothing and beauty store at Battersea Power Station in time for the Christmas season.
Marks & Spencer is proactively addressing significant upcoming cost increases while capitalising on a solid sales trajectory.
