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Marks & Spencer profits fall again Marks & Spencer profits fall again
(35 minutes later)
Profits at Marks & Spencer have fallen for the second year in a row as its much maligned womenswear divison continued to disappoint. Profits at Marks & Spencer have fallen for the second year in a row as its much maligned womenswear division continued to disappoint.
UK sales fell 1% overall, dragged down by a poor performance in general merchandise, which dropped 4.1% on a like-for-like basis.UK sales fell 1% overall, dragged down by a poor performance in general merchandise, which dropped 4.1% on a like-for-like basis.
The results could have been worse had it not been for a 4.5% rise in international sales and a 16.6% boost in multichannel business. Food was also up 1.7% in the UK. The results might have been worse had it not been for a 4.5% rise in international sales and a 16.6% boost in multichannel business. Food was also up 1.7% in the UK.
Total group sales were up 1% to £10bn; however, pretax profit for the year to end of March fell 5.8% to £665.2m.Total group sales were up 1% to £10bn; however, pretax profit for the year to end of March fell 5.8% to £665.2m.
The M&S chief executive, Marc Bolland, said: "In a challenging market, M&S sales grew by 1.3%. Three of the four parts of the business made strong progress. Chief executive Marc Bolland said: "In a challenging market, M&S sales grew by 1.3%. Three of the four parts of the business made strong progress.
"We are working hard to get the general merchandise performance back on track. We have already made progress in our operational execution, and our new autumn/winter ranges have received a positive reaction.""We are working hard to get the general merchandise performance back on track. We have already made progress in our operational execution, and our new autumn/winter ranges have received a positive reaction."
The autumn-winter fashion range was launched last week and is being seen as "make or break" for Bolland. The autumnwinter fashion range was launched last week and is being seen as "make or break" for Bolland.
The group's poor performance has led to speculation that Bolland, who joined M&S three years ago, could be under threat and there have also been rumours of a possible takeover by private equity groups.The group's poor performance has led to speculation that Bolland, who joined M&S three years ago, could be under threat and there have also been rumours of a possible takeover by private equity groups.
Analysts were unimpressed with the figures. Bryan Roberts, Kantar director of Retail Insights, said he was concerned that "the feted autumn/winter clothing range will not be the silver bullet that some hope it might be".Analysts were unimpressed with the figures. Bryan Roberts, Kantar director of Retail Insights, said he was concerned that "the feted autumn/winter clothing range will not be the silver bullet that some hope it might be".
These concerns were echoed by Freddie George at Cantor Research. He said it would take time before the new womenswear ranges resonate with customers – and possibly up to three seasons before it has any real impact on sales. It will also take time for M&S to attract the younger, freer spending consumers that it needs as its core customer base ages. These concerns were echoed by Freddie George at Cantor Research. He said it would take time before the new womenswear ranges resonated with customers – and possibly up to three seasons before it had any real impact on sales. It would also take time for M&S to attract the younger, freer spending consumers that it needs as its core customer base ages.
Bolland said there are no plans for M&S to launch its food range online, a policy he also adopted at his previous company Morrisons, which left the UK's fourth biggest supermarket falling behind its rivals. It signed a deal with Ocado last week in an attempt to catch up. Bolland said there were no plans for M&S to launch its food range online, a policy he also adopted at his previous company Morrisons, which left the UK's fourth biggest supermarket falling behind its rivals. It signed a deal with Ocado last week in an attempt to catch up.
He also said capital spending would fall to £775m, below guidance of £850m, explaining that most of the legacy issues in the supply chain and in stores had been resolved, with two-thirds undergoing an upgrade.He also said capital spending would fall to £775m, below guidance of £850m, explaining that most of the legacy issues in the supply chain and in stores had been resolved, with two-thirds undergoing an upgrade.
"We have done most of the heavy lifting of the legacy investments. The car has been rebuilt, however it still needs the completion of the ecommerce distribution.""We have done most of the heavy lifting of the legacy investments. The car has been rebuilt, however it still needs the completion of the ecommerce distribution."
On his future prospects at the company, he said: "I've had this question over the last nine months. This is a big job, we have a great transformation going on and we have a lot of hard work ahead of us.On his future prospects at the company, he said: "I've had this question over the last nine months. This is a big job, we have a great transformation going on and we have a lot of hard work ahead of us.
"A big job comes with pressure and I knew that when I started the job. We are not concerned about wooing back the lost shopper.""A big job comes with pressure and I knew that when I started the job. We are not concerned about wooing back the lost shopper."