M&S is tackling a £60 million rise in National Insurance without passing costs to consumers.
- CEO Stuart Machin announced plans to offset the financial impact through cost-saving measures.
- The recent Budget’s National Insurance amendments present a “double whammy” for the retailer.
- M&S aims to sustain its improved value perception amidst these financial pressures.
- The company’s first-half profits have seen significant growth, up more than 17%.
Marks & Spencer is addressing a significant £60 million increase in its National Insurance liabilities, a result of recent changes declared in the Budget. The firm’s CEO, Stuart Machin, declared that M&S is determined to manage this fiscal challenge internally, striving to circumvent burdening consumers with price hikes. “We don’t want to pass on these costs to our customers. We want to maintain where we are,” he asserted, underlining the company’s commitment to maintaining consumer trust.
The modifications to National Insurance, characterised by increased rates and a reduced pay threshold, have compounded financial pressures on businesses, with M&S experiencing this adversarial climate. The additional financial responsibility adds to the retailer’s existing £108 million National Insurance remit from the previous year, necessitating strategic internal cost reductions.
Stuart Machin further emphasised the retailer’s policy of inflation absorption rather than price inflation. He highlighted M&S’s historical success in nurturing this approach, mentioning, “We’ve got a good track record of absorbing inflation…We don’t want to put these price rises through.” Maintaining the company’s strong value perception, which is at a high not seen in over a decade, remains a priority for Machin as he seeks to offset these financial headwinds through efficiency savings.
The strategic approach has borne fruit, with M&S reporting a noteworthy rise in its first-half profits. The company observed a greater than 17% increase in profit before tax and adjustments, reflecting a total of £407.8 million for the half-year ending 28 September. Additionally, their clothing and food sectors continue to manifest their market share growth, each marking a fourth consecutive year of gains, underscoring the organisation’s operational resilience and market adaptability.
M&S remains steadfast in maintaining its value perception while navigating new financial obligations posed by the revised National Insurance framework.
