M&S is tackling a £60m rise in National Insurance costs without raising prices.
- The recent Budget has seen M&S hit with an additional £60m National Insurance bill.
- CEO Stuart Machin is intent on absorbing these costs through internal savings.
- M&S aims to maintain its market position by preserving value perception.
- The retailer has seen profit growth despite new financial pressures.
M&S finds itself confronting significant financial challenges following the latest Budget changes, which introduce an extra £60m to its National Insurance obligations. CEO Stuart Machin emphasises the company’s commitment to managing these cost increases internally, rather than burdening customers with higher prices. Machin states, ‘We don’t want to pass on these costs to our customers. We want to maintain where we are,’ highlighting the retailer’s dedication to price stability.
The unexpected impact of rising National Insurance rates, coupled with a lower wage threshold for employer contributions, compounds M&S’s financial strain. Despite preparing for some level of increased cost, the extent of this ‘double whammy’ has pushed the business to seek out new cost-saving measures. This £60m comes as an addition to the £108m already expended last year on National Insurance.
Machin’s strategy revolves around upholding M&S’s reputation for providing value, resisting the urge to offset costs through price hikes. He points out, ‘We’ve got a good track record of absorbing inflation…We don’t want to put these price rises through.’ This approach is vital for preserving the retailer’s market standing, as Machin notes their best value perception in a decade.
M&S’s determination to navigate these headwinds with minimal disruption has yielded positive results. The company reports a robust 17% increase in profit before tax and adjusting items for the half-year ending 28 September, rising to £407.8m. Both the clothing and food sectors have experienced a fourth consecutive year of market share growth, underscoring the success of the value-driven strategy.
M&S is resolute in its approach to absorb the £60m National Insurance increase through internal efficiencies rather than impacting consumers.
