UK's Marks & Spencer targets 19 million customers in online drive

LONDON Thu May 1, 2014 11:16am EDT

A Marks & Spencer sign is seen outside outside a store in London January 8, 2014. REUTERS/Stefan Wermuth

A Marks & Spencer sign is seen outside outside a store in London January 8, 2014.

Credit: Reuters/Stefan Wermuth

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LONDON (Reuters) - Marks & Spencer, Britain's biggest clothing retailer, launched a new online push on Thursday, targeting the 19 million customers a year who shop in its UK stores but do not use its website.

The 130-year-old firm, which also sells homeware and upmarket food, is at the end of a three-year, 2.3 billion pound ($3.9 billion) plan aimed at addressing decades of under-investment and reversing falling sales and profit.

Marc Bolland, chief executive since 2010, is aiming to turn M&S into an international retailer that reaches customers through stores, the web and mobile devices and is better able to compete with faster-growing rivals like Next.

A big chunk of the investment was spent on establishing a huge new e-commerce distribution center (EDC) in Castle Donington, central England, that opened last year and on a new website platform that went live in February.

E-commerce chief Laura Wade-Gery said the EDC and new website gave the company confidence it could increase sales and achieve profit margins at M&S.com that match those from stores within three years.

"Our e-commerce business is profitable and we're planning to make it more profitable," she said at a media and analyst presentation to mark the start of a marketing drive to back the website.

M&S says it has 34 million customers a year. Of that total, 6.7 million shop with M&S in store and online, 8.3 million shop with M&S in store but do not shop online with the firm or with competitors, while 19 million shop with M&S in store but do shop with competitors online.

"We do believe that the 19 million consumers that do not consume at M&S.com today is a real opportunity for us," said marketing director Patrick Bousquet-Chavanne.

Last month M&S posted its best quarterly performance in clothing for three years, indicating its turnaround plan may finally be gaining traction after several false dawns. However, the firm still posted an eleventh straight quarterly fall in underlying general merchandise sales.

M&S's online sales increased 12.5 percent in its fiscal fourth quarter to March 29.

The slowdown from third-quarter growth of 22.7 percent was attributed to the February shift of the M&S website from a platform provided by Amazon to its own new platform.

The firm said it managed the transition cautiously, reducing its usual level of marketing activity to ensure a smooth move.

"We're beginning the first steps in accelerating the marketing and we will steadily build sales over the coming months," added Wade-Gery.

When M&S reports 2013-14 results on May 20 it is expected to report a third straight fall in annual profit.

Analysts are forecasting a profit before tax and one-off items of about 615-630 million pounds - that would be 6 percent less than M&S made in 2012-13 and for the first time less than Next's annual profit.

($1 = 0.5922 British pounds)

(Editing by Pravin Char)

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