At least one British grocer is still holding its own against the march of the European discounters.
Marks & Spencer has just demonstrated that it is possible to grow sales even in the face of food-price deflation and the toughest climate for retailers in living memory.
What’s that you say? M&S is not a grocer? Well, officially it isn’t. Officially it’s a general retailer. It’s just that grocery is the part of the business it’s good at – as the latest trading statement amply demonstrated. After the brief buzz created by “that” suede skirt, the one that drove the first rise in general merchandise sales for four years, we’re back in familiar territory ... negative territory. It’s true the 0.4 per cent quarterly sales decline wasn’t anything like as bad as the 1 per cent fall the City had expected. But doing less badly than feared isn’t exactly something to celebrate. And the stark reality facing M&S is that the figures could have been much worse.
During the spring of last year, it was reeling due to distribution problems and the botched relaunch of its online channel. This means the numbers this time round were given a boost by dint of the fact the problems have since been fixed. Retail guru Nick Bubb estimated that the sales decline would have been somewhere between 4 and 5 per cent had it not been for the online bounceback.
Marc Bolland, the chief executive, blamed a chilly May and the need to cut prices in June for the tough time the retailer is once again having in general merchandise. He appears to have taken on the mantle of Thorntons. The chocolatier was notoriously fond of scapegoating the weather when it hit turbulence.
But does it matter? While at WH Smith, Kate Swann managed to keep her investors happy during a period of declining sales because she had profits going the other way.
It’s a bit of a push to compare the two, but a share buyback programme starts Wednesday and margins have held up. Mr Bolland will also no doubt take some comfort from the AGM. Despite a long-term incentive plan that could pay him up to three times his basic salary, shareholders waved through the remuneration report.
Well, there is that food business that keeps gobbling up customers’ cash. Would it be a step too far to suggest M&S switches sector to join the likes of Sainsbury’s, Tesco and, or course, Mr Bolland’s old shop Morrisons? He might like that because he wouldn’t have to keep explaining his struggles with womenswear, notwithstanding the success of that skirt.