Marks & Spencer posts drop in profits
Marks & Spencer has reported a 3.9% fall in its full year pre-tax profits as rising food sales offset a drop in clothing sales.
In the year to 29 March 2014, underlying profit before tax fell to £622.9 million from £648.1 million a year earlier.
Group sales rose by 2.7% on a constant currency basis helped by 1.7% growth in like-for-like food sales and good performances at the retailer’s international and multi-channel businesses. Meanwhile like-for-like general merchandise sales, which include clothing, fell by 1.4%.
M&S said it was beginning to see early signs of improvement in the performance of its general merchandise business after it relaunched its ranges with a focus on quality and style. This resulted in like-for-like clothing sales returning to growth in the fourth quarter for the first time in three years.
Never Miss a Retail Update!International sales were up 6.2% on a constant currency basis in the year as the retailer performed well in its priority markets with strong growth in India and its flagship stores in China. While trading in the Republic of Ireland continued to be difficult, the performance at M&S’s European operation improved as it took full control of its Czech and Eastern European business. The retailer’s franchise business across the Middle East and Asia also put in a good performance.
Online sales grew by 22.8% as visits to the M&S website increased by 9%. During the year, online business accounted for 16% of general merchandise sales compared to 13% last year. Mobile sales increased by over 90% while sales from tablet devices doubled and now account for around 25% of online sales compared with 15% last year.
Commenting on the results M&S chief executive Marc Bolland said: “M&S grew sales by 2.7% last year. We are focused on improving our performance in general merchandise and were pleased to see early signs of improvement. Our food business had a very strong year, consistently outperforming the market.
“Three years ago, we recognised the scale of investment required to transform our business, investing to strengthen our foundations and improve our customer offer. We are making solid progress on this journey and are now focused on delivery.”
Looking at current trading, M&S said its new website would take four to six months to settle in and, as a result, would have some impact on general merchandise performance in the first quarter. However, the improvement in clothing sales seen the fourth quarter has continued.
M&S chairman Robert Swannell said: “The investment made in executing our strategy over the last three years puts M&S in a stronger position to compete in a retail world undergoing profound change. Our priorities now are to deliver on the investment we have made and to make M&S a more profitable, stronger and well-equipped business.”
