M&S warns of “gathering storm” for retailers
Marks and Spencer has warned retailers of a ‘gathering storm’ in the coming months, as economic uncertainty and the cost-of-living crisis increasingly puts a strain on consumer budgets.
In their half year trading report, the retailer reported a fall in pre-tax profit of 24% from last year but insisted that it was trading well and expected to record an adjusted profit before tax for its main businesses in 2023.
Group revenue rose by 8.5% to £5.5bn in the six months up to October but profits suffered from higher overheads. M&S also saw reduced online revenue through its Ocado partnership as more consumers head back to the high street.
Many businesses are suffering from higher energy prices, wage bills and raw material costs.
M&S said it had “slightly advantaged demographics” and as a result may suffer less than other businesses, citing a slightly older and wealthier customer base.
Marks and Spencer said: “We expect market conditions to become more challenging in (fiscal year) 2024. The combined impacts of the cost-of-living squeeze and the most marked rise in the cost of doing business for many years are creating pressure on margins industry wide.
“All parts of the retail sector will be affected, and this will result in unviable capacity leaving the industry, creating opportunities for the leaner players who remain. We believe that the M&S positioning and the accelerated change underway, give scope for greater resilience”.