M&S sees drop in yearly online sales due to website changes

Retailer M&S suffers a drop in online sales following disruption caused by website relaunch

Marks & Spencer suffered a 2% decrease in online sales for the year to 28 March 2015, after moving its website away from its Amazon Web Services (AWS) e-commerce system and bringing it back in-house.

In its annual results, the firm stated that although its recent redesign and move away from AWS provided it with its first year of control over the website, the move had more of an effect on customers than expected, leading to a drop in sales.

M&S made several updates to the website and its distribution centres over the course of the year to improve customer experience, and managed to claw sales back by the fourth quarter.

“As a result of these actions, sales returned to growth in the fourth quarter and we saw gradual improvement across all key metrics: traffic grew by 15%, customer satisfaction rose by 18% and conversion rates improved. Some seven million shoppers have registered on the new site,” said M&S.

Despite the drop in online sales, the retailer’s yearly underlying profit before tax was up by 6.1% to £661.2m.

M&S chief executive Marc Bolland said the firm had made "good progress".

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“In food, we had an outstanding year in a difficult market. In general merchandise, we significantly increased the gross margin, and, while sales performance was below our expectations, we returned to growth in the fourth quarter,” he said.

The firm’s year-on-year capital expenditure also dropped across all areas, including purchasing new stores and investment in supply chain and technology, as some projects came to an end.

“We continued to control costs and capital expenditure tightly, resulting in significantly improved free cash flow. We are transforming M&S into a stronger, more agile business – putting the right infrastructure, capabilities and talent in place to drive our strategic priorities,” said Bolland.

M&S chairman Robert Swannell added: "We are a more capable business following a sustained period of investment in our infrastructure and in our people."

Although reduced, investment is still being made in Marks & Spencer’s distribution technology, which it hopes will drive a growth in online sales in the future.

A new commercial system for general merchandise is also in the pipeline for the firm in the future.

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