Marks & Spencer Chief Executive Stuart Machin has raised concerns about the impact of absorbing around £120 million in costs resulting from changes in national insurance and forthcoming wage increases. While the company aims to avoid passing on these costs to customers, Machin acknowledged the challenges of managing the substantial expenses they are facing to protect the business.
Machin revealed that M&S anticipates its tax bill to rise by £60 million next year following the Chancellor's decision to increase employers’ national insurance contributions by 1.2 percentage points and lower the threshold at which companies begin paying it. He expressed surprise at the combined effect of these changes, emphasizing that while some costs were anticipated, the compounding nature of the adjustments posed unanticipated challenges for the business. Alongside the national insurance increases, M&S expects a further £60 million hike in labor costs due to minimum wage rises, a factor the retailer had already factored into its financial planning.
Despite the looming financial pressures, M&S is committed to exploring avenues to reduce expenses elsewhere to avoid immediate price increases for consumers. Machin highlighted the company's track record in finding cost savings and reiterated efforts to navigate these challenges without resorting to price hikes. This warning follows a trend of retail concerns over rising costs post-Budget, with analysts projecting substantial additional financial burdens for UK grocers due to the national insurance changes. The warnings from M&S and other retailers highlight broader discontent within the business community regarding the Budget's measures and their perceived impact on growth.