Marks & Spencer (MS), the largest clothing retailer in England, is pulling out all the stops in order to keep its once robust business afloat. After eight consecutive quarters of declining sales it has announced it will extend the time it normally takes to pay its merchandise suppliers in an attempt to tamp down rising costs.
MS’s general merchandise division has been its weakest performer. That catch-all category includes clothing, footwear and homewares and the retailer has bet its turnaround on a reinvigoration of the its lately laggard sales.
The revised payment schedule is designed to lift MS’s depleting cash reserves. According to the announcement, MS is extending their payment terms with freight-on-board (FOB) suppliers from sixty to seventy-five days, and full-service vendors (FSV) will be hit with a delay of five to seven weeks.
According to an MS spokesperson, “Like any company, we are always looking at ways to ensure we are running our business efficiently and that it is well set up for the future. As part of this, we are extending our GM supplier payment terms to bring us in line with industry standards.”
While the news has stung already frustrated suppliers, it seems to have enlivened investors. MS shares hit a five-year high on Thursday, a sign that many are optimistic regarding an MS revival.