UK: M&S FY earnings hurt by clothing sales decline
- FY pre-tax profit falls 3.9%
- GM like-for-like sales down 1.4%
- Total sales grow 2.7%
Earnings were dragged down by a decline in clothing sales
Marks & Spencer's general merchandise division performed worse than analysts expected in its full-year after the UK retailer this morning (20 May) revealed a drop in earnings dragged down by a decline in clothing sales.
Shares in Marks & Spencer fell nearly 3% in early morning trading after the retailer reported a fall in annual profits for the third year in a row.
Underlying profit before tax dropped 3.9% to GBP623m (US$1.05bn) for the year ended 29 March. Earnings were dragged down by a 1.4% drop in like-for-like merchandise sales, the majority of which is clothing. Chief executive Marc Bolland, however, said he was pleased to see early signs of improvement in the division.
In the last year the retailer has been busy refocusing its general merchandise business, with more of an emphasis on quality and style. It also launched M&S Collection and a Leading Ladies marketing campaign. The division returned to growth in the fourth quarter but has failed to perform as well as the group's food division, which saw sales grow 1.7% for the year.
Total UK gross margin was down 20bps at 40.6%, as a result of a decline in general merchandise gross margin and a mix change due to a difference in the rate of sales growth in the GM division and food.
Group sales, however, were up 2.7% at GBP10.3bn, while UK sales climbed 2.3%. International sales were up 6.2% and multi-channel sales grew 22.8%.
Chairman Robert Swannell, said: "The investment made in executing our strategy over the last three years puts M&S in a stronger position to compete in a retail world undergoing profound change. Our priorities now are to deliver on the investment we have made and to make M&S a more profitable, stronger and well-equipped business."
Bernstein Research analyst Jamie Merriman added: "While management's tone remains positive and confident in the transformation of the general merchandise division, we believe the stock reaction today will be driven by how much credit investors are willing to give M&S after another year of relatively weak results."
Marks & Spencer's share price was down 2.59% to 439.30 pence at 08.45 GMT today.
Marks & Spencer Plc offers a wide range of quality products at prices ranging from economy to high mid-range. It is one of the longest established British high street stores and sells clothing, food a...
Having posted strong growth from its sales of packaged food throughout the economic recession, Marks & Spencer’s performance towards the end of the review period was hampered by the poor performance o...
Several events are set to converge on the Bangladeshi capital Dhaka in December, including the Second International Trade Expo for Building and Fire Safety....
Over the forecast period, Marks & Spencer (Asia Pacific) Ltd will continue to monitor and review efficiency in supply chain and other operations in order to reduce cost. The company will also continue...
Destination Maternity is to expand into Israel through an international franchise agreement with H&O Fashion Ltd, one of the country's most dominant fashion-retail chains....
This report analyzes the worldwide markets for Women's and Girls' Clothing in US$ Million by the following Product Segments: Women's and Girls' Dresses, Women's and Girls' Suits & Coats, Women's and G...
- Marks & Spencer to extend mobile phone monitoring
- China tightens on corporate social responsibility
- Outdoor industry's future must be more inclusive
- Factoring: a lifeline for apparel suppliers?
- Who has signed the Bangladesh safety accord?
- Adidas "Reebok sale" would be admittance of defeat
- Cambodia clothing factory collapse injures eight
- H&M and The North Face commit to responsible down
- Bangladesh taps factory inspectors ahead of review
- Coats to open new zip factory in Bangladesh
- Ethiopia – the emerging textile and clothing industry
- Apparel Market in China to 2018 - Market Size, Trends, and Forecasts
- Global market review of denim and jeanswear – forecasts to 2020
- Wool in the 21st Century: new prospects for a familiar fibre
- Prospects for the Textile and Clothing Industry in Vietnam