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digibyte – Troubled M& platform on track for growth by Christmas

Derek du Preez Profile picture for user ddpreez November 4, 2014
The new website for the high street retailer has had some difficulties in recent months and is still currently negatively impacting sales.

High street retailer Marks and Spencer released its half-year results today, which both surprised financial analysts and indicated that its new online

platform may have overcome teething issues and is set for growth by the busy Christmas period.

The 130-year old British retailer saw half-year pre-tax profits fall 0.4% to £279.4 million, but its underlying profits rose 2.3% to £267.6 million – beating expectations. Analysts commented that the results may well indicate a turnaround for M&S, which has experienced years of decline during the poor economic conditions since 2008.

Chief executive, Marc Bolland, said:

M&S delivered sales growth and increased profit in the first half despite a tough market, particularly in September. We are pleased with the progress we have made against our key priorities for the year: GM gross margin, improving Womenswear, driving Food growth and Cash generation.

However, it is M&S's digital strategy that is still in question. Despite it claiming that it wants to be an “international, multi-channel retailer”, since the launch of the new M& platform, which saw it shifting all systems off of Amazon Web Services and bringing them house, online sales have been in decline and customers have been plagued with problems.

During the company's last results, Bolland rejected that the idea that he was concerned about the teething issues. Back in July he said:

The settling in of the new M& site has had an impact on sales. It's not an issue. The platform, you don't build for a quarterly result. It's been a resilient build-up.

It's a journey, not something customers recognise in a morning.

In July, M&S stated that its new online platform contributed to a 8.1 percent fall in sales. This figure has now improved to a 6.3% drop in sales in the first half of the year, with the earnings statement stating that M& is on track for growth ahead of Christmas.

M&S said:

The M& sales trend improved through the period, with the updates made to the new platform driving increased customer satisfaction and an improving conversion rate since launch. We remain on track to return to growth ahead of our peak trading period.

My Take

Still not great that sales are in the negative for M&, but if the corporate statements are to be trusted, this should soon turnaround. However, whether or not the platform can withstand the demand of the busy Christmas period and whether or not growth remains after January, that remains to be seen.

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