Wednesday, 24 May 2017

M&S counts cost of shake-up as profits plunge by 63%



Marks & Spencer has reported a 63% plunge in annual profits as costly restructuring took its toll and sales slumped.
 
Pre-tax profits collapsed to £176.4m for the year to 1 April as the retailer was hit by more than £400m in one-off charges reflecting store closures and pension changes.


But even stripping these out, profits were down by more than 10%, while the beleaguered clothing and homeware division saw a miserable final quarter as like-for-like sales tumbled by a worse than expected 5.9%.


Chief executive Steve Rowe warned the sector was facing a tough consumer environment.


He told Sky News: "The biggest thing that we all face is an uncertain economic horizon at the moment and the consumer is quite fragile particularly in terms of the forward view of their own finances."


The group's results showed like-for-like clothing and home sales for the year were down 3.4%, the worst annual decline for four years.


Food sales also fell, by 2.1% for the quarter, and by 0.8% for the year.


However, the group pointed out that the late timing of Easter had an adverse impact on comparisons.
Shares opened lower but were later 2% up.
 
 
Mr Rowe, a company veteran who became boss last year, said there was "much still to do" to turn around the fortunes of the company but that he was pleased with progress and pointed to improvements in full-price sales.


"As we anticipated, the planned restructuring of M&S has come with a cost and has impacted profits," he added.


The latest sales fall for clothing and homeware marks a setback after an upturn in the Christmas quarter, which has now proved to be a blip amid a long run of declines.


M&S said weaker sales for the year were expected as part of its strategy to reduce promotions and markdowns as well as focus on "quality, style and authority" - cutting back a tenth of its lines.


It also pointed to a tough market which saw an overall decline over the year and where the outlook remained uncertain, as well as acknowledging higher costs thanks to the weak pound making imports more expensive.


The group said it was shrinking by 1-2% the amount of store space devoted to clothing and home in the current financial year, while opening around 90 new Simply Food stores.




SKY    News.