Retail giant, M&S, has denied profiteering during the cost-of-living crisis, saying falls in food profits prove how difficult things have become for buyers.
Speaking on an investors’ call, M&S chief executive Stuart Machin claimed M&S has absorbed costs to “protect customers from the full force of inflation,” adding that soaring costs were creating a “challenging time” for buyers.
He said: “I’ve never known such a job for the buying team. Working with the supply chain to deliver products to our stores has been an incredibly challenging time. Everyone has worked incredibly hard trying to get the balance right.”
M&S’s results showed adjusted operating profits for its food business fell to £248m compared with the £277.8m it made in 2021/2022. This resulted in a net adjusted operating margin of 3.4%, and was despite the fact food sales increased by 8.7%.
The inflation absorbed by M&S was “quite obvious when you look at the margin investment,” Machin said.
“The inflation we’ve had, driven by commodity prices, energy prices and wage inflation – which is still really significant throughout the whole supply chain – has hit us as a retailer more than we’ve ever experienced.” He added: “As we know inflation is at a 45-plus year high.”
He said: “We’ve obviously had to focus on selling more volume and we've had to focus on really reducing our costs and trying to restructure our business and offset all the other inflationary headwinds. But, we have the same headwinds as our suppliers: mainly energy and wages.”
While absorbing costs has reduced M&S’s margins, “the resulting positive effect on customer volumes drove sales.”
He promised that as soon as the cost of products comes down “we will pass that on to the customer”.
He added: “I'm sure things will recede and get a bit better. There is still uncertainty but hopefully we will see more of this by autumn.”
MPs recently announced they will start investigating how equitably profit and risk are shared throughout the food supply chain.
The Office for National Statistics announced that while overall UK inflation fell to 8.7% in April, food inflation still stood at 19.1%.
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