The chief of M&S has slammed the government’s suggestion of a price cap on food essentials as “preposterous” and said it should try to understand business better.
Stuart Machin was responding to reports the Treasury is considering asking supermarkets to freeze the price of essential items such as milk, eggs and bread in return for lifting regulations on packaging and healthy food.
It follows plans announced by the SNP for compulsory price caps in Scotland on up to 50 essential items, which first minister John Swinney defended yesterday.
Machin said the majority of products in the firing line were already voluntarily frozen in price and loss-makers for M&S.
“My first comment would be it’s completely preposterous,” Machin said. “I don’t think the government should be trying to run business. I think they should probably try and understand business better.
“If anything, there is so much in the government’s control. My advice to government is to reduce some of the tax and regulatory burden and free us up in a very competitive market.”
Machin said ONS figures this morning showing food inflation at 3% in the 12 months to April “demonstrates that food retailers are taking a big responsibility to try and minimise passing through prices”.
“And when you look at some of the margins on the products people are referring to, things like a pint of milk – for us it’s 85p and it’s been 85p for a couple of years. Although we protect the price we’re giving our farmers, we don’t make money on milk. It’s actually loss-making. I think it’s about negative 7% margin.
“We’ve held the price of bread at 75p to try and give everyday great value, and our bread is negative margin.
“We make small single-digit margin on things like eggs and some core grocery lines like sugar and flour.
“Bananas is another case in point. The last time I looked, bananas were minus 6% margin.”
Machin was commenting as M&S announced its full-year results to the end of March, showing group adjusted profit before tax fell 23.8% to £671.4m. Operating profits were down 16.9% to £818.4m pre-adjustment.
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