Marks & Spencer full year profits down as clothing sales slide
Marks & Spencer has reported a drop in full year profit after clothing and homeware sales declined in its fourth quarter.
In the year to 1 April, adjusted pre-tax profit dropped by 10.3% to £613.8 million due to the expected fall in clothing and home sales and increased costs of new space. Statutory pre-tax profit fell by 63.5% to £176.4 million.
Group revenue rose by 2.2% to £10.6 billion.
The retailer said full year food revenue growth of 4.2% was driven by new stores. Clothing and homeware revenue was down 2.8% due to a planned reduction in promotions and clearance sales.
Meanwhile, like-for-like clothing and homeware sales were down 5.9% in the retailer’s fourth quarter. Like-food sales fell by 2.1%.
Steve Rowe, Marks & Spencer chief executive, said: “Last year we outlined a comprehensive plan to build strong foundations for the future. We said we would recover and grow clothing and home, continue with our plans for food growth, remove costs and simplify the business. We achieved a huge amount in the year and whilst there is still much to do, I am pleased with our progress and we remain on track.
“As we have made improvements to our clothing & home product and proposition, our customers have noticed; we are starting to stabilise market share and importantly have seen full price market share growth, as we removed excessive discounting. In addition, our new Food stores continue to exceed our expectations.
“As we anticipated, the planned restructuring of M&S has come with a cost and has impacted profits, but the business is still strongly cash generative and we reduced our net debt.”
International profit before adjusted items rose by 15.4% in the full year to £64.4 million as a result of the decision to exit owned stores in 10 loss-making markets.
The company said it is planning to “reshape and improve” its UK store estate to make it better suited for multichannel retail. This will result in a refresh of around 25% of clothing and home space over the next five years and further growth of Simply Food with circa 250 new stores by the end of the 2019/20 financial year.
Rowe said: “Looking ahead, we will continue our programme of self-help in a tough trading environment. We remain committed to delivering for our customers and shareholders as we build sustainable foundations for the future.”
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