Monthly Archives: September 2009

Some Marks & Spencer’s customers have bemoaned changes to the store’s policies. Photograph: David Sillitoe

It has long been by far the most generous returns policy on the high street, but was clearly edging towards its sell-by date. Now Marks & Spencer is facing an angry consumer backlash over its decision to quietly reduce the period of time within which shoppers must return their goods – from 90 days to 35.

In recent days, unhappy shoppers have been expressing their frustration on internet forums such as Moneysavingexpert.com. But the interesting thing is that it has taken nearly six months for the change to sink in. The new policy came into force on 12 April and while, understandably, it was not announced in a fanfare of publicity, it is spelled out clearly on the store’s receipts.

Today, M&S announced it has been doing pretty well, despite the economic downturn. But it hasn’t been an easy year for the retailer once considered a national treasure. In May it was forced into a humiliating U-turn over plans to charge women £2 extra for big bras following a rebellion among its customers. Last week its up-market competitor Waitrose announced it was opening 300 convenience stores that will compete head on with M&S Simply Food outlets.

So what is behind the new returns policy, which was agreed after a major review? It is clearly being done on cost-cutting grounds. The three-month window gave lazy returners the opportunity to hang on to their goods until long after some items were still available to buy. Under the old scheme you could buy a winter coat in January and take it back in spring.

M&S insists the vast majority of people returning goods take them back within 28 days, and that two-thirds do so within two weeks. It claims it still has the most generous window for returns on the high street – TK Maxx, for instance, only has a 14-day returns policy.

But people seem to expect more from M&S. Some consumers have expressed concern that the change will hit Christmas shoppers, or at least those organised enough to buy their gifts more than a month before 25 December. But the retailer says that between 1 October and 11 December it is extending its policy so unwanted or ill-fitting Christmas gifts can be returned, with a receipt, until 16 January 2010.

Perhaps the policy as it existed before was too good to last. Surely if you decide you want to change something you have bought yourself, or take back an unwanted present, there is no reason to leave the bag to gather dust for three months. And store managers have a surprising amount of discretion on returns – I have successfully taken items back to M&S even when I have lost the receipt. But have you encountered problems? Has the change put you off shopping at M&S, or do returns policies have no impact on where you choose to shop?

Marks and Spencer sales beat analyst forecasts. Photograph: Daniel Berehulak/Getty Images

There are increasing signs that the worst could be over at Marks & Spencer after the retailer once again unveiled better-than-expected sales figures.

The fashion and food store chain – which is a bellwether for middle-aged, middle-England consumer confidence – said like-for-like sales were down just 0.5%, with clothing and homewares down 0.8% and food sales flat compared with last year.

Analysts had been expecting overall like-for-like sales to be down some 1.5%, with clothing and homewares down 2.7% and food down 0.3%.

Sir Stuart Rose, M&S chairman, said: “Consumer confidence has reached the bottom. People feel better about life.” But he added there was still “pressure on pockets”.

He pointed out that the food halls had now posted better like-for-like sales every quarter for a year and said the improved performance was down to “sharper values, better availability and product innovation”.

M&S said sales at its international stores were up 9.6% on the same quarter a year ago, while online trade up 30%.

In June M&S reported like-for-like sales down 1.4% – far better than City forecasts of 3.5%. The figure was a huge improvement on the previous quarter, when like-for-like sales in the UK fell by 5.9%.

Rose said the improvement in sales showed: “The actions we are taking are working” and said profit margins would now be down only 50-100 basis points on last year’s levels, due to better buying and fewer markdowns. The previous guidance had been for a margin decline of 125-175 basis points.

Matthew McEachran, retail analyst at the broker Singer, said the improved margin and better sales were likely to add £40m to next year’s profits.

But despite Rose’s upbeat tone, shares in M&S slipped by 1.6% this morning to 368.2p, down 6.6p. They have risen by almost a quarter in the last three months, and are still some way short of the 560p at the beginning of 2008.

Who’s next for the M&S hotseat?

The new trading update benefits from being measured against a big downturn last year, when retailers were coping with the reverberations of the banking crisis.

At that time like-for-like sales were down by more than 6%, with general merchandise down 6.4% and food sales- which were getting a boost from rising prices – down by 5.9%.

The new M&S food sales figures are an endorsement of Rose’s decision to appoint the food boss, John Dixon, to the board earlier this month – making him a prime candidate to take over from Rose as chief executive next year.

Dixon has cut prices – 18% of M&S food sales are now labelled Wise Buys. The food halls, however, are still growing at a far slower rate than at its rival Waitrose, and last week the John Lewis-owned grocery chain turned up the heat on M&S as it announced plans to open 300 convenience stores across the country.

Over the past two years, M&S has seen its fortunes take a serious turn for the worse. In May, Rose slashed the retailer’s dividend by a third as he unveiled annual profits of £604m – down from more than £1bn in 2008 – and this year the chain is forecast to turn in only £535m.

Rose has also run into trouble with shareholders over his promotion to the role of executive chairman – contravening corporate governance guidelines. He has pledged to appoint a new chief executive by next summer and is thought to be keen to promote an existing M&S senior executive, probably Dixon or the finance director, Ian Dyson. Rose then hopes to stay on as chairman for about a year.

Next month the candidates, which also include the clothing chief, Kate Bostock, will each make presentations to leading investors. Rose said: “It’ll be a bit like Britain’s Got Talent, or M&S Has Got Talent.”

Shareholders, however, are making it clear they would prefer an external appointment, such as Andy Bond from Asda or Marc Bolland from Morrisons, but fear suitable candidates will not take the job while Rose remains as chairman.