High street retailer M&S has said the process is in place to reengineer its end to end supply chain, and remove costs, complexity and working capital, after seeing like-for-like sales dip 2.2% in the six-month period to September 2018.
M&S CEO Steve Rowe cited the retailer’s “weak” supply chain as one of the key reasons why the retailer underperformed during the 26-week period to September 2018.
“We are on track to restructure our store portfolio with over 100 full-line closures and expect to see newly remodelled stores open next year. We are fixing the basics of our online channel and there are very early signs of improvement. Every aspect of our ranges, how we trade, our supply chain and marketing is undergoing scrutiny and change,“ he said.
The retailer added that it has invested in improving its distribution centre site in Castle Donington to improve the immediate capacity issues through peak trading. This is augmented with plans to open a further national distribution centre at Welham Green next spring, which will allow the retailer to increase its single tier network coverage to c.85%. However, M&S added that further investment is required as it seeks to achieve its growth targets in 2021, “after which additional despatch capacity will be required,” the retailer emphasised.
IT infrastructure issues has also set the retailer aback as it sought to integrate new systems during the first half of the year, in particular the deployment of new warehouse management systems. Its Clothing & Home and Food departments have profound supply chain issues as a consequence of a lack of a state of the art infrastructure, a fragmented management structure, and stock levels, availability, markdown and waste all remain at “uncompetitive levels”, the company stated.
“In Clothing & Home stock carrying levels remain at c.20 weeks and availability remains unsatisfactory. Supply chain and store operating costs are impacted by the complexity of stock handling and the volume of slow-moving lines,” M&S said in its results statement.