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Demand for Marks & Spencer (M&S) knickers among younger women has played a pivotal role in a £1bn sales boost for the retailer, leading to its strongest performance since 1997.
M&S reported a significant increase in lingerie sales, with one in two women purchasing bras from the retailer. In the past year alone, M&S sold 20 million bras and 60 million pairs of knickers. The demand surge was particularly strong among Millennials and Gen Z customers, with shoppers under the age of 30 accounting for a third of underwear sales, doubling from the previous year.
The success of M&S’s lingerie range among younger shoppers was largely attributed to the “B by Boutique” line, known for its bold and vibrant styles. Launched in 2022, this range saw a 16% increase in sales over the year.
The resurgence in popularity among younger shoppers is a testament to CEO Stuart Machin’s efforts to revitalise M&S’s clothing division, which had previously been criticised for focusing too much on older customers. The introduction of new, trendier lines and collaborations with social media influencers have significantly boosted demand. The company also featured actress Sienna Miller in its autumn womenswear campaign and will design the off-duty suits for the men’s England football team at this summer’s European Championship.
M&S now holds a 10% share in the clothing and homeware market, with sales in this division rising by 5.3% over the year. In an update to investors, Mr Machin declared it “the beginnings of a new M&S,” resulting in a nearly 10% surge in M&S shares to 300p, the highest level since 2017. Analysts at Peel Hunt praised the results, stating there was “virtually nothing not to like.”
Ian Lance of Redwheel, M&S’s third-largest shareholder, expressed optimism about the turnaround strategy, noting that despite scepticism from some investors, the strategy has considerable potential yet to be realised.
M&S reported a 58% surge in profits to £716.4m for the year ending in April, surpassing analysts’ forecasts of £684m. The retailer ended the year in its strongest financial position since 1997, with £45.7m in cash excluding lease liabilities, compared to a net debt of £355.6m the previous year.
However, Mr Machin cautioned that the transformation is far from complete. He emphasised the need for ongoing cultural change, faster progress in digital and technology infrastructure, a truly personalised customer experience, and resetting international priorities.
The food division was the biggest sales driver, growing by 13%. Mr Machin attributed this to a “virtuous circle of investment in quality and innovation,” encouraging shoppers to buy more. M&S has been heavily investing in refreshing its food ranges, planning to improve the quality of 1,000 best-selling products this year after revamping a similar number last year.
Despite these successes, the online grocery business, a joint venture with Ocado, posted a £37.3m loss, up from £29.5m the previous year. M&S offset this with cost-saving measures and a 9.3% revenue increase to over £13bn. While there was a marked improvement in revenues at Ocado, profitability remains below expectations.
Tensions between M&S and Ocado have been high, with Ocado threatening legal action over final payments related to their joint venture. However, Mr Machin insisted that this “slight disagreement” was not impacting day-to-day operations and reaffirmed the commitment to Ocado Retail’s turnaround strategy.
M&S has avoided heavy reliance on loyalty card promotions, unlike some competitors. Mr Machin criticised “tricksy pricing” strategies and emphasised M&S’s commitment to being a trusted retailer. However, he hinted that M&S is currently rethinking its loyalty scheme to better serve its customers.
