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M&S sees profits increase to £1bn M&S sees profits increase to £1bn
(about 3 hours later)
Marks and Spencer has reported a 4.3% rise in annual profits to £1bn, but says it is cautious about its prospects for the next 12 months.Marks and Spencer has reported a 4.3% rise in annual profits to £1bn, but says it is cautious about its prospects for the next 12 months.
The retailer said like-for-like sales in the UK slipped in both food and clothing in the year to 29 March.The retailer said like-for-like sales in the UK slipped in both food and clothing in the year to 29 March.
It described trading in the first seven weeks of the new financial year as "mixed", with April being "difficult".It described trading in the first seven weeks of the new financial year as "mixed", with April being "difficult".
M&S announced a big cut in bonuses for staff, after missing targets, but its store teams are set to share £12.8m.M&S announced a big cut in bonuses for staff, after missing targets, but its store teams are set to share £12.8m.
Last year it paid out a record £91m in bonuses to its 75,000 staff.Last year it paid out a record £91m in bonuses to its 75,000 staff.
M&S Chief Executive Stuart Rose answers your questions
The M&S profit is the largest at the firm since 1997/98.The M&S profit is the largest at the firm since 1997/98.
But chief executive Stuart Rose told the BBC: "We did not do quite as well as we would have liked."But chief executive Stuart Rose told the BBC: "We did not do quite as well as we would have liked."
ExpansionExpansion
The firm was "well positioned" to compete in the challenging retail environment being experienced in the UK, Sir Stuart said.The firm was "well positioned" to compete in the challenging retail environment being experienced in the UK, Sir Stuart said.
"We expect market conditions to remain difficult for the foreseeable future and are managing our business accordingly," he said."We expect market conditions to remain difficult for the foreseeable future and are managing our business accordingly," he said.
"Tight stock control and management of costs are a priority.""Tight stock control and management of costs are a priority."
M&S will be hoping to underpin any weakness in the UK environment with geographical diversification Richard Hunter,Hargreaves Lansdown Stockbrokers
The results included a 1.7% fall in like-for-like sales during the final three months of the year - the second successive quarter of falling sales after a disappointing Christmas.The results included a 1.7% fall in like-for-like sales during the final three months of the year - the second successive quarter of falling sales after a disappointing Christmas.
For the year as a whole, UK like-for-like sales fell 0.5%, with sales of general merchandise - which includes clothes - down 0.5% and food sales 0.4% lower.For the year as a whole, UK like-for-like sales fell 0.5%, with sales of general merchandise - which includes clothes - down 0.5% and food sales 0.4% lower.
M&S will be hoping to underpin any weakness in the UK environment with geographical diversification Richard Hunter,Hargreaves Lansdown Stockbrokers
"Whilst headline numbers will no doubt be taken positively, this set of results is delaying the inevitable," said Collins Stewart analyst, Rob Mann."Whilst headline numbers will no doubt be taken positively, this set of results is delaying the inevitable," said Collins Stewart analyst, Rob Mann.
"Margins are on the slide and it is not just a function of greater contribution from food. Cost inflation is heavy and gross margins are under increasing pressure," Mr Mann added."Margins are on the slide and it is not just a function of greater contribution from food. Cost inflation is heavy and gross margins are under increasing pressure," Mr Mann added.
New stores and expansions helped M&S increased its shop floor space in the UK by 4.8% during the year, and it forecast growth of 5.5% in the current financial year.New stores and expansions helped M&S increased its shop floor space in the UK by 4.8% during the year, and it forecast growth of 5.5% in the current financial year.
'Better job''Better job'
Looking further afield, international sales were up by 16.8% to £712.9m, while operating profits grew 33% to £116.4m.Looking further afield, international sales were up by 16.8% to £712.9m, while operating profits grew 33% to £116.4m.
"With more space being added in Europe and India, and with a Shanghai store on the horizon, M&S will be hoping to underpin any weakness in the UK environment with this geographical diversification," said Richard Hunter of Hargreaves Lansdown Stockbrokers."With more space being added in Europe and India, and with a Shanghai store on the horizon, M&S will be hoping to underpin any weakness in the UK environment with this geographical diversification," said Richard Hunter of Hargreaves Lansdown Stockbrokers.
He added that an increase in the firm's dividend payout showed "a level of management confidence in the business which is not necessarily echoed by their outlook".He added that an increase in the firm's dividend payout showed "a level of management confidence in the business which is not necessarily echoed by their outlook".
M&S investors have been upset by Sir Stuart's decision to promote himself to combine the roles of chief executive and chairman - which goes against City recommendations on corporate governance practice.M&S investors have been upset by Sir Stuart's decision to promote himself to combine the roles of chief executive and chairman - which goes against City recommendations on corporate governance practice.
Sir Stuart has conceded the firm could have "done a better job of explaining" the decision.Sir Stuart has conceded the firm could have "done a better job of explaining" the decision.
Earlier this month, M&S rolled out a programme to charge 5p for single use food carrier bags.Earlier this month, M&S rolled out a programme to charge 5p for single use food carrier bags.