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Marks & Spencer profits fall again | Marks & Spencer profits fall again |
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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 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. |
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 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 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 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." |