M&S chief calls on government for ‘growth plan for the country and business’

The chief of M&S has called on the government to create a plan for growth, as he warned extra costs arising from the budget would affect the retailer’s approach to recruitment.

Chancellor Rachel Reeves’ first budget in October heaped an extra £120m in costs on M&S. Half of the figure, arising from an increase in the national living wage, was already planned for by the business, but the other half, arising from an increase in National Insurance paid by employers, was not.

Speaking as M&S announced a market leading performance in grocery in the Christmas ‘golden quarter’ – with total food sales up 8.7% in the 13 weeks to 28 December – CEO Stuart Machin said: “We have a growth plan. Our strategy in M&S is all around investing carefully for growth.

“And therefore, if I was to give any advice to the government, it would be that we would love to see a growth plan for the country and a growth plan on how to help business.”

He said M&S would “pass on as little as possible” of the unplanned-for costs to customers, but warned: “Does it make us look at how we recruit? Of course it does.

“We’re investing heavily in big programmes for the future of the company, we’re investing heavily in the supply chain, heavily in store rotation, in digital technology, online, to grow our online business over time, so we’ve got to be really focused on that.

“And that means when we do recruit, being really diligent on where we are recruiting and making sure we’re recruiting in the right areas, whether that’s in the centre, in our distribution or serving customers in stores.”

Machin said customers had been “slightly more optimistic as they were going into Christmas” but consumer sentiment was now more “subdued”.

“Obviously, with the budget headlines, there was some slight negativity and anxiety,” he said. “So what we’re very focused on is the need for value.

“We’ve inflated behind the market now for the last two years. That’s what we intend to do this year.”

M&S Food like-for-like sales were up 8.9% in the golden quarter.

Food volume growth of 6.6% from the first half was sustained into the Christmas trading period, driven by increased customers and transactions, making M&S the top performing store-based grocery retailer in volume and value growth over the period, based on Kantar data covering the 12 weeks to 29 December.

However, increased volumes and associated stock-flow challenges led to “slightly higher seasonal markdown as we reset for the new year”, the retailer said.

Elaborating in a conference call with journalists, Machin said: “The first thing is, in food we’re growing. Our two-year number is 20%-plus over Christmas.

“And therefore, one of the growing pains is getting that volume into our small stores that are 4,000, 5,000 or 7,000 sq ft.

“And a lot of our stores were at capping levels. I was in stores Christmas week. You couldn’t get another delivery in and you couldn’t get down the aisles.

“That means the good news for us is accelerating, investing in our store rotation programme, because our renewal stores in food of course outperformed expectations.

“Our small stores did a great job, but of course we were never going to get the growth in small stores that we would in renewal stores.”

He added: “There were definitely lessons to learn. Our stock allocation and how we try and smooth out the stock never quite works, and it was a bit lumpy and inconsistent.

“Again, even more reason to invest in our network, which is critically important over these next five-plus years in our food business. That, in food, is a particular opportunity.

“What the food team would say is that although we’ve delivered pretty good numbers, we have a big job on recovering and really making sure we’re best in town, in our communities for our customers.”