M&S hails turnaround progress despite drop in profits
Marks & Spencer has said it is making good progress with its turnaround despite reporting a drop in full year profit.
In the year to 30 March, profit before tax and adjusting items fell by 9.9% to £523.2 million.
During the year, revenue in M&S’s clothing and homewares business declined by 3.6% as the retailer felt the impact of store closures. In addition, like-for-like sales were down 1.6%. M&S said the the business had shown encouraging signs of progress in its third quarter, although sales in the fourth quarter had been constrained by weak availability.
Meanwhile, revenue in the retailer’s food business dropped by 0.6% as like-for-like sales fell by 2.3%, or by 1.5% when adjusted for Easter.
Despite the results, M&S said it is making good progress with its transformation plan after establishing “accountable” businesses with substantial changes in leadership.
Steve Rowe, M&S chief executive, said: “We are deep into the first phase of our transformation programme and continue to make good progress restoring the basics and fixing many of the legacy issues we face. As I have said, at this stage we are judging ourselves as much by the pace of change as by the trading outcomes and change will accelerate in the year ahead.”
In transforming its food business, M&S said it was aiming to “protect the magic” and its focus on quality, freshness, and innovation. It is also working to reshape its store estate, infrastructure, operating systems, cost management and supply relationships.
In the clothing and homewares business, the retailer is planning to deliver a reduction in options and range duplication and a substantial increase in the number of autumn lines. There will also be an improvement in size ratios, an increased focus on style and fashion, and more investment in value. This activity will be supported by the update of the retailer’s sub-brand strategy, including the re-launch of the Per Una range.
Looking ahead, Rowe added: “Whilst there are green shoots, we have not been consistent in our delivery in a number of areas of the business. M&S is changing faster than at any time in my career – substantial changes across the business to our processes, ranges and operations and this has constrained this year’s performance, particularly in clothing & home. However, we remain on track with our transformation and are now well on the road to making M&S special again.”
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