Company’s priority markets delivered a good performance with strong growth in India and flagship stores in China. While trading in the Republic of Ireland continued to be difficult, performance in the European business improved and company took full control of Czech and Eastern European business. Franchise business across the Middle East and Asia continued to perform well.
Commenting on the results, Marc Bolland, Chief Executive, said, “M&S grew sales by 2.7 percent last year. We are focused on improving our performance in general merchandise and were pleased to see early signs of improvement. Our food business had a very strong year, consistently outperforming the market. Three years ago, we recognised the scale of investment required to transform our business, investing to strengthen our foundations and improve our customer offer. We are making solid progress on this journey and are now focused on delivery.”
M&S refreshed womenswear departments in its top 70 stores. Designed to showcase the latest collections and improve navigation, the new look and feel features high-impact entrance zones highlighting the latest trends, as well as new look destination departments such as Coat Shops and Dress Shops. It is also introducing revamped footwear, menswear, accessories and beauty departments.
M&S.com has delivered a strong performance in 2013/14 and outperformed the market with sales up 22.8 percent. Visits to the site increased by 9 percent this year and its online business accounted for 16 percent of general merchandise sales compared to 13 percent last year.
In Asia, sales were up 15.7 percent on a constant currency basis. Company opened 22 new stores, focusing on driving growth in our key priority territories of India and China. In India sales were strongly up with good like-for-like growth and company opened 10 new stores including new flagship store in Bandra, Mumbai. In November, M&S announced its plans to double Indian store presence by 2016 through partnership with Reliance Retail. In China, company saw strong results from our Hong Kong stores, while its flagship Shanghai stores also performed well. In April, it announced plans to focus on centrally-located Shanghai stores and to open flagships in other cities, including Beijing and Guangzhou, and to find a local partner to support this roll out.
Franchise operations continued to grow. The Middle East saw sales increase by 2.6 percent on a constant currency basis. In February, company unveiled largest international store, a 72,000 square foot flagship in Kuwait with franchise partner Al-Futtaim Group. Company opened 20 new stores across 10 markets, including the opening of our first standalone lingerie & beauty stores in Saudi Arabia with franchise partner Al Hokair.
Sales in Europe were up 3.9 percent on a constant currency basis. Company continued to grow our presence in Western Europe, opening its largest continental European store in The Hague. In France, M&S now have five stores including flagship store at Beaugrenelle.
For the for financial year 2014/15, gross margin is expected to grow by 100bps in general merchandise as a result of sourcing benefits, particularly in the second half of the year. Operating costs are expected to increase by 4 percent as a result of an increase in depreciation, inflation and the addition of new space.