M&S blames 62% profit fall on supply chain

After a 62% fall in pre-tax profits for the year to 31st March, Marks & Spencer (M&S) has said that its supply chains in both Clothing & Home as well as Food need ‘significant upgrades’.

Part of the supply chain problem is M&S online fulfilment centre at Castle Donington has been struggling to cope with peak demand, in part due to some of the company’s systems being described as ‘dated’.

M&S chief executive Steve Rowe said: “There are a number of structural issues to address and we are taking steps towards fixing these. The new organisation will largely be in place by July and the team is now tackling transforming our culture to make M&S a faster, lower cost, more commercial, more digital business.

“This is vital as we start to leverage the strength of the M&S brand and values across a family of businesses to deliver sustainable, profitable growth in three to five years.”

One hundred M&S stores will be closed by 2020.

The retailer said: “Although our online sales are growing, our online capability is behind the best of our competitors and our web site is too slow. Our fulfilment centre at Castle Donington has struggled to cope with peak demand and some of our systems are dated. In both businesses we need to revitalise our ranges and reassert our reputation for value for money.

“The website is being improved and we are investing to increase and improve e-commerce capacity, including at our Castle Donington site to support our ambition to double the online share of our Clothing & Home sales to over 33 per cent.

“We are also building a new retail distribution centre at Welham Green. Teams have been established to address the supply chain issues in both main businesses, to deliver a faster, lower cost network.”