M&S confronts a £60m rise in National Insurance costs after recent Budget changes, aiming to absorb these without increasing prices.
- CEO Stuart Machin reassures that cost reductions will be the strategy for managing new financial pressures.
- The announced rate increases and threshold adjustments cause the financial strain M&S aims to navigate.
- The retailer’s commitment to value is highlighted by its refusal to pass costs to consumers despite economic challenges.
- M&S has improved its profit margins, highlighting successful market share growth in both clothing and food sectors.
M&S is navigating a significant financial challenge with a £60 million increase in their National Insurance bill, following recent changes outlined in the Budget. CEO Stuart Machin has expressed the company’s intention to manage these additional costs through strategic cost-saving measures, rather than transferring the burden to customers through increased prices. “We don’t want to pass on these costs to our customers. We want to maintain where we are,” Machin articulated, emphasizing their commitment to consumer value.
The retailer had anticipated some impact from modifications in National Insurance, but the scale of the changes—characterised by a ‘double whammy’ of increased rates and a lowered pay threshold for tax—has heightened the pressure. This substantial £60 million increment comes in addition to the £108 million already paid by the company last year, illustrating the escalating financial demands.
Machin is determined to avoid any compromise on their pricing strategy, affirming the company’s strong track record in absorbing inflation. “We’ve got a good track record of absorbing inflation…We don’t want to put these price rises through,” he stated. His strategy includes offsetting these new ‘headwinds’ with further cost-cutting efforts, aiming to protect the brand’s esteemed value credentials.
In the face of these challenges, M&S’s approach to delivering strong value perception has yielded positive results, with a notable surge in profits during the first half of the year. Profit before tax and adjusting items rose by more than 17% for the half-year ending 28 September, reaching £407.8 million. Impressively, both the clothing and food sectors reported their fourth consecutive year of market share growth, underlining the company’s strategic success amidst economic turbulence.
M&S remains steadfast in its commitment to maintain consumer value while navigating fiscal challenges, highlighting resilience in its operations.
