Marks and Spencer reports fall in profits
Marks and Spencer has posted a fall in its annual profits following a decline in clothing sales during the past year.
In the year to 30 March 2013, pre-tax profit dropped £564.3 million from £658 million in the previous year. While group sales rose 1.3% to £10 billion, like-for-like sales of general merchandise, which includes clothing, dropped 4.1% in the year. Food sales rose 1.7% on a like-for-like basis.
Total UK sales rose by 0.9% with food sales increasing by 3.9% but general merchandise sales fell by 2.4%.
Marc Bolland, chief executive, said the retailer had suffered a “challenging market” in the year although it had made good progress in food, its international business and multi-channel operations.
Never Miss a Retail Update!He added: “We are working hard to get the general merchandise performance back on track. We have already made progress in our operational execution, and our new Autumn/Winter ranges have received a positive reaction.”
The retailer has been working to improve its clothing offer following poor sales. It recently unveiled its new autumn winter collection, the first under the guidance of its new style director Belinda Earl who is the former head of Jaeger.
Multi-channel sales accelerated during the year, growing by 16.6%. The retailer said it now has over 3.6 million weekly visitors to its UK website following the introduction of improved navigation, the provision of style advice and a better choice of products. Marks and Spencer’s online business now accounts for 13% of general merchandise sales.
International sales were up 4.5% as the retailer opened 45 new international stores in the year and key markets in India and China continued to trade strongly with double digit like-for-like growth.
A new store format to improve navigation and make better use of space was rolled out to 337 stores by the end of the year, representing over 65% of the total store space. Sales performance in the new concept stores has been 3% ahead of the rest of the business, an improvement on the initial 2.6% uplift.
In the 2013/14 financial year, the retailer plans to add around 2% of new space in the UK and around 15% in its international space.
Marks and Spencer said that trading in the first seven weeks of the new financial year had been in line with expectations despite the challenging market conditions, adding that significant progress had been made as the retailer enters the third year of its transformation plan.
Robert Swannell, chairman, said: “2012/13 was another year of progress for M&S where a mixed trading performance was balanced by good progress in building longer term foundations in line with our key strategic goals.”
