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Marks & Spencer sees fall in annual profits

Marks & Spencer has reported a 15.7% decline in annual pre-tax profit, which it attributed to a “challenging economic environment”.

CITY & CORPORATE

Marks & Spencer sees fall in annual profits

Statutory pre-tax profit in the year to 31 March was £658 million down from £780.6 million in the previous year. 

On an underlying basis pre-tax profit fell 1.2% to £705.9 million while total sales grew 2% to £9.9 billion helped by strength in the retailer’s food and international businesses.

Like-for-like sales in the UK rose 0.3% with like-for-like food sales up 2.1%. However, general merchandise fared less well with sales falling by 1.8%. The decline was driven by a mixed performance in both Womenswear and Home, with the latter impacted by the retailer’s decision to exit from the technology market.

In the UK sales were £8.9 billion, a 1.5% increase on the previous year, while international sales grew by 5.8% to just over £1 billion.

Online sales were up 18% to £559 million with multi-channel operations continuing to be a key area of growth for the retailer following a number of improvements introduced during the year. M&S grew its share of online traffic by 11% and its mobile site experienced over 300% growth in visits in the year. In addition the company launched its first international websites for the French and Irish markets, and plans to add eight new international websites by the end of the current financial year.

M&S announced in November 2010 that it expected to grow revenues by £1.5 billion to £2.5 billion per annum for three years but has now cut that target to between £1.1 billion and £1.7 billion "as a result of the deterioration in the economic environment since we set out our plan".

The retailer said it would slow the rate of its store expansion programme over the next two years due to growth in its online market, and plans to expand its retail space by 3% this year and 2.5% next year.

Chief Executive Marc Bolland said: "Marks & Spencer performed well in a challenging economic environment, growing group sales by 2% and holding market share. We also made good progress with our strategic plans.

"We managed the business prudently with tight control of costs and capital investment, delivering earnings in line with last year, and substantial efficiency savings in our capital investment plans."

 

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