M&S cuts marketing spend as pretax profit slides 64%

M&S launched the 'spend it well' ad earlier this month
M&S launched the 'spend it well' ad earlier this month

Profits at Marks & Spencer plummeted 63.9% to £176.4m last year, due to higher costs from opening new food stores and a drop in clothing sales, as the retailer cut marketing spend by 13%.

Sales for the retailer were flat at £10.6bn in the financial year ending 1 April. Like for like sales were down by 1.9%. 

The biggest drop was in clothing and home sales which fell by 3.4% in the final quarter. M&S chief executive Steve Rowe said the fall was partly due to a decision to sell more clothes at full price.

Food sales performed better, dropping 2.1% in the last three months of the financial year. 

Excluding one-off costs, M&S' pretax profit was down 10.3% to £613.8m. 

In a statement, M&S also revealed that marketing costs declined by 12.6% to £162.7m year on year.

This, the retailer said, was due to "reduction in activity and the more effective use of our marketing budget, such as our Christmas campaign where we increased customer views while reducing costs, as well as the annualisation of the launch of Sparks last year."

During the last financial year M&S ended its 16-year relationship wth Rainey Kelly Campbell Roalfe/Y&R (now Y&R London) and earlier this month launched its first ad campaign by Grey London.

The retailer is also bringing in Halfords chief executive and former McDonald's UK boss Jill McDonald to turn around M&S' struggling non-food business. 

Rowe said M&S had made improvements to its non-food business and was starting to stabilise market share. 

He added: "As we anticipated, the planned restructuring of M&S has come with a cost and has impacted profits, but the business is still strongly cash generative and we reduced our net debt.

"Looking ahead, we will continue our programme of self-help in a tough trading environment."

Start Your Free 30-Day Free Trial

Get the very latest news and insight from Campaign with unrestricted access to campaignlive.com , plus get exclusive discounts to Campaign events.

Become a subscriber


Don’t miss your daily fix of breaking news, latest work, advice and commentary.

register free