Marks & Spencer warns revival of clothing business will hit short term profits
Marks & Spencer chief executive Steve Rowe has said the retailers actions to revive its struggling clothing business will have an adverse effect on profit in the short term.
In its full year results statement for the 53 weeks to 2 April, Marks & Spencer revealed that pre-tax profit dropped by 18.5% to £488.8 million. On an underlying basis, pre-tax profit rose by 4.3% to £689.6 million while group revenue edged up 2.4% to £10.6 billion.
Rowe said: "Our results last year were mixed. We continued to outperform on Food but we underperformed on Clothing & Home sales. This is not satisfactory and today we are outlining our initial plans to address the issues and to position Marks & Spencer to deliver profitable sales growth."
Food like-for-like sales increased by 0.2% as product innovation continued to be a key driver of performance. During the year, Marks & Spencer introduced 1,700 new products including new cuisines within its Taste range such as Greek, Lebanese and Spanish prepared meals. It also redeveloped and expanded its Italian ranges
Clothing sales fell by 2.9% on a like-for-like basis as unseasonal weather, particularly in the autumn, resulted in high levels of promotional activity.
Marks & Spencer said plans to turn the clothing business around would include a focus on product, quality and fit, restoring price position by lowering prices and reducing promotional stance, and enhancing the customer experience with sharper ranges, better availability and investment in store staffing.
Rowe added: "We are clear on the actions needed to recover and grow Clothing & Home, which is our top priority; to continue to grow our Food business; and to focus on driving profitability. We are investing to re-establish our price position by sharpening prices and to enhance service by putting more employees into our stores.
"These actions, combined with the difficult trading conditions, will have an adverse effect on profit in the short term. We are, however, confident that our commitment to delivering the right product, price and service will help return Clothing & Home sales to growth. This, together with continued momentum in Food, will provide us with a solid base from which to build a long term sustainable business."
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