M&S noted adjusting operating profit in its clothing and home division increase to £402.8m ($512.7m) from £323.8m.
Overall this contributed to a 9.3% group-wide revenue jump to £13bn with operating profit increasing 33.8% to £838.6m and profit before tax rising 41.4% to £672.5m.
Sales in womenswear and menswear outperformed on improved product style, quality and value.
GlobalData retail analyst Eleanor Simpson-Gould pointed out M&S' clothing division, traditionally favoured by an older demographic, is now attracting a younger audience, drawn in by new partnerships with Nobody’s Child, Sweaty Betty and adidas.
"In addition, Marks & Spencer has intensified its marketing efforts, releasing its first menswear advertisement in nearly a decade and launching successive digital advertising campaigns that resonate with a younger, professional demographic," explained Simpson-Guild.
Clothing market share increased to 10.0% (from 9.6%), and full price share increased to 12.4% (from 11.6%).
"The improved performance of clothing and home is driven by better product, style and quality at everyday great value. This is appealing to a broader customer base, showing the growth potential from improving the product and online shopping experience, and the store environment through renewal," said Stuart Machin, CEO.
Simpson-Gould agrees adding that a key to the shift in consumer perception has been the retailer’s strategic improvements in buying and merchandising.
Notably, she said M&S has concentrated on curating capsule wardrobe essentials, expanding the variety and scope of its products, and enhancing both availability and stock flow.
She described the retailer's improved full price sales share as a significant achievement that "will enhance the retailer’s profit margin and improve customers’ perception of M&S as a premier destination for quality ranges and variety".
M&S said long-term changes improving the growth potential of clothing and home include:
- Reducing the long tail of option count with double-digit percentage reduction in womenswear since 2019/20
- Buying bolder and deeper, growing lines with over £1m of sales by c.50% over the last two years
- A shift to everyday trusted value with full price sales mix increasing from 63% to 81% since 2019/20
- Improving stock flow with stock cover now less than 12 weeks compared with 18 weeks in 2018/19
- Increased focus on availability with more controls on stock flow into the UK and on to stores based on demand.
"We remain laser-focused on the growth opportunities across women's, men's, kids, and core home," said Machin, adding the long-term vision for M&S is to grow share of clothing and home sales towards 50% having increased 22% from five years ago.
"Online growth has increased, supported by better product and more effective marketing. Despite this, profitability is not yet market-leading despite our scale advantage. There is much more to do to develop the online and M&S app experience and customer engagement, whilst growing partner brands. All of this will help retain customers within our M&S eco-system.
"The clothing and home supply chain is now more focused with fewer, more strategic suppliers having also rationalised the number of distribution centres in the UK. There is lots to do to reduce costs, improve stock flow and drive availability with plans underway to modernise our merchandise and range management technology."
Cost saving objectives, ramping up supply chain efficiency in M&S clothing and home pays off
M&S says its ambition for its clothing and home division is to move from "a slow-moving operation with a broad supply base and distribution centres which store stock, to a group of strategic suppliers with a rationalised network of automated distribution centres, where full visibility enables us to flow stock more directly to the customer".
It has now begun to consolidate knitwear, denim and lingerie across fewer suppliers and cut the number of fabric mills as volumes are combined.
In UK logistics, volumes were consolidated into nine core sites. Investment in omnichannel capability and the increased use of hub stores for returns consolidation delivered cost savings. This year, further investment will be made in boxed storage and hanging goods automation, creating capacity for growth.
It is investing in a new planning merchandising and range management platform which starts this year to deliver efficiencies in the planning process, in sourcing, and in stock flow.
In terms of sustainability, it increased the use of recycled polyester to 70% and 100% of cotton is now responsibly sourced in clothing.
"We are at the beginnings of a new clothing, home and beauty business with a better product and trading model and an improving customer proposition, which is resonating with a broader customer base. There is substantial opportunity and restructuring plans are underway across the product offer, store estate, online experience, and supply chain which offer the potential for sustained growth," Machin said.
Simpson-Gould highlighted that M&S has pledged to open nine new stores this year, alongside the continuous refurbishment of its existing store portfolio.
She explained: "The retailer reports that of the renewals completed in FY2022/23, sales increased by 14% owing to favourable customer footfall and basket size improvements."
However, she pointed out that with online sales surpassing those in the physical channels for the clothing and home segments, rising 7.8% versus a more modest 4.1% instore sales growth, M&S must prioritise an integrated omnichannel approach to ensure that the expansion of its physical store network complements, rather than detracts from, its overall sales performance.
