Marks & Spencer's pre-tax profits down 8.9% in half year
Marks & Spencer has reported an 8.9% drop in its first half profits after seeing clothing and homeware sales fall for a ninth consecutive quarter although the retailer said that it was seeing Â“early signs of improvementÂ” following the launch of its new autumn/winter collections.
In the six months to 28 September, underlying pre-tax profit at M&S fell to £261.6 million from £287.3 million a year earlier. While food sales rose by 3.2% on a like-for-like basis in the second quarter, like-for-like sales of general merchandise dropped by 1.3% in the period.
During the six month period, multi-channel sales were up 28.5% with traffic to the retailer’s website continuing to grow as it increased its number of customers as well as the rate of conversion. M&S said that 55% of multi-channel orders are now collected in store or ordered in-store for home delivery.
Mobile sales grew by over 70%, with 140% growth in sales from tablets which now account for circa 25% of sales compared with 11% a year ago.
International sales increased by 8% on a constant currency basis to £0.6 billion although international operating profit fell 6.2% at £51.1 million due to continuing pressures in the Republic of Ireland and an acceleration in the retailer’s store opening programme across its key markets. M&S opened 26 international stores in the six month period with over 50 to follow in the second half.
Commenting on the results, M&S chief executive Marc Bolland said: "Marks & Spencer made progress with a strong performance in Food, International and M&S.com. Our key priority was the re-launch of Womenswear. In September we launched our first new collection with new advertising and improved store formats. Although only in store for three weeks of the half year, our Autumn/Winter collection has been well received by customers, and we have seen some early signs of improvement.
"At the same time we continued to invest in the long term transformation of the business. We are pleased with the progress made, given the high level of activity and a number of key projects launching this year. This has led to a higher level of additional costs, which while planned for, have impacted short-term results.”
Bolland added that that the retailer would move to a "lower, more sustainable” long-term investment level of £550 million from 2014/15.
Looking ahead, Marks & Spencer said there was little evidence that any improvement in consumer confidence was leading to increased spending in the retail sector and, as a result, it would remain cautious about the outlook for the rest of the year.
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