UK: Marks & Spencer first-half profit down nearly 10%
- H1 pre-tax profit fell 9.7% to GBP289.5m (US$462.6m)
- Group sales increased 0.9% to GBP4.7bn
- Like-for-like sales declined 1.4%
Retailer Marks & Spencer has seen its first-half pre-tax profit fall by nearly 10% on declining general merchandise sales, which include clothing and footwear.
The company today (6 November) said profit before tax fell 9.7% over the 26 weeks ended 29 September to GBP289.5m (US$462.6m).
Group sales increased 0.9% over the period to GBP4.7bn.
UK underlying operating profit fell 3.3% to GBP300.5m, as UK revenue edged up 0.6%. Like-for-like sales declined 1.4%, which the group attributed to a challenging trading environment and short term merchandising issues in general merchandise.
Internationally, underlying operating profit dropped 7.3% to GBP54.4m as sales fell 1.4% to GBP496.8m.
During the first quarter, general merchandise sales, which includes clothing, fell 5.1%, down 6.8% on a like-for-like basis. The division saw sales improve in the second quarter, up 0.1%, but down 1.8% on a like-for-like basis.
The retailer attributed the first quarter general merchandise decline to merchandising issues in its spring/summer clothing collections, which were also hit by unseasonable weather.
In the second quarter, it said it took "decisive action" to bring stock levels back in line for autumn/winter, improving its merchandising processes, and better aligning buying and external marketing. This has meant that more traditional autumnal ranges such as coats, jackets and hosiery were the best performing categories.
M&S has also seen significant changes to its general merchandise team, appointing John Dixon as executive director for general merchandise following the departure of Kate Bostock, announced in July.
It has also appointed Belinda Earl as style director, as well as Francis Russell as women's wear trading director and Janie Shaffer as lingerie and beauty trading director.
"The new team is now in place, and focused on delivering improvements for our customers in both product, and operational execution. These improvements will take time to come through, but our customers will see the benefits of the changes from next summer," the company said.
Against a backdrop of high levels of promotional activity, the company expanded its "good" clothing offer, and ran a number of "selective promotions".
Chief executive Marc Bolland said: "We are pleased to report a better performance across the business in the second quarter. We took steps to address the short term merchandising issues in general merchandise and as a result, we delivered an improved performance."
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