Marks & Spencer Profits Rise Despite Decline in Clothing, Food Sales

First-half revenues were down 3.1 percent following declines in the two biggest categories.

LONDON — Profits at Marks & Spencer climbed 5.8 percent to 89.8 million pounds in the first half as the company kept costs under control, while revenues dipped 3.1 percent to 4.97 billion pounds due to declines in clothing and food, two of the retailer’s biggest divisions.

Clothing and home sales were down 2.7 percent, impacted by store closures, while online clothing sales growth outpaced the market, M&S said in its interim report on Wednesday. Food revenue, meanwhile, fell 0.2 percent, reflecting “tough trading” and the company’s new strategy to slash promotional activity.

M&S said it would continue to retool its clothing offer, which has long been a drag on growth.

The retailer said its clothing and home division has been the victim of an “aging customer base, a very wide range, a weak supply chain and an aging store portfolio,” although it still has a “very strong customer franchise and market position.”

The decline in clothing and home followed the closure of 21 stores and three outlets in the period. Discounted sales were broadly level with the corresponding period last year, with the impact of sale timing offset by a planned reduction in promotions.

M&S said its objective is to reshape its buy, reduce the number of options, buy more “stylish and contemporary product” in greater depth, and deliver market-leading value.

“By focusing on stylish and wearable ‘must-have’ essentials and building on our strong customer franchises in denim, lingerie and back-to-school and workwear, we will shift back toward family-aged customers seeking style, quality and value,” the store said.

In the first half, the retailer reduced the number of lines on offer and bought deeper into key categories such as dresses. It also reduced the price of everyday lines, such as men’s chinos. The store has also put a bigger focus on digital campaigns to push everyday essentials and value clothing.

M&S has also turned its attention to food, which has been suffering from too many promotions and from competition against U.K. supermarkets and foreign discounters such as Aldi and Lidl.

The company said it plans to reduce prices and remove “complex and confusing” promotions. M&S is reengineering its food categories and development pipeline to broaden its appeal and frequency of shop.

In a statement Wednesday, M&S said that over recent years, the business has become excessively dependent on both short-term promotions and complex and confusing multibuys. “We have already reduced the prices of more than 100 everyday lines with many more to go,” the company said.

Marks & Spencer chief executive officer Steve Rowe added that against the background of profound structural change in the industry, “we are leaving no stone unturned and reshaping our business, its organization and culture.

“This phase is about rebuilding the foundations of the future M&S and we are judging progress as much by the pace of change as by the trading outcomes. M&S is becoming a faster, more commercial and more digital business.”

He said the company is on track to restructure its store portfolio with more than 100 store closures, while it expects to see newly remodeled stores open next year. The company said it is also fixing the basics of its online channel “and there are very early signs of improvement. Every aspect of our ranges, how we trade, our supply chain and marketing is undergoing scrutiny and change.”