Marks & Spencer profits fall 9.7%
Marks & Spencer has reported a 9.7% fall in its half year profits as trade was impacted by poor weather, weak consumer confidence and pressure on shoppers disposable incomes.In the 26 weeks to 29 September, pre-tax profit slipped to £289.5 million from £320.5 million in the same period last year. Group revenue rose 0.9% to £4.7 billion with much of the growth driven by a good performance in food and multi-channel sales.
In the UK food sales grew by 3.4% and were up 1.1% on a like-for-like basis compared to the same period a year earlier. In the second quarter of the year, like-for-like food sales grew by 1.6% after rising 0.6% in the first quarter.
General merchandise sales, which includes clothing and homewares, fell by 2.5% in the half year. They decreased by 4.3% on a like-for-like basis, having a recovered from a 6.8% decline in the first quarter to post a 1.8% fall in the second quarter.
International sales rose 3.6% in the first half as the retailer opened 19 new stores with over 30 to follow in the second half of the year. It now trades from 396 stores in 44 territories and plans to accelerate growth by the end of the year. It also launched four new websites in Europe.
Multi-channel sales were up 17.8% with traffic to the M&S website continuing to grow to an average of over 3.4 million weekly visitors. The retailer said that over a third of its dresses and one in five suits are now purchased online.
Marc Bolland, chief executive, said: “We are pleased to report a better performance across the business in the second quarter. We took steps to address the short term merchandising issues in General Merchandise and as a result, we delivered an improved performance. Food outperformed the market on a like-for-like basis.
"Eighteen months in, we are making strong progress with our plan to transform M&S into an International Multi-channel retailer. Our new International stores are performing well, and our Multi-channel business is delivering strong growth.
M&S said its new strengthened team was now in place and was focused on delivering improvements in both product and operational execution.
Regarding the outlook, Bolland added: “Recent trading has been volatile. This, coupled with continuing pressure on consumers' disposable incomes, makes us cautious about the outlook for the rest of this year. However, we are well set up for the Christmas trading period."
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