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...
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...
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...
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...
- Myanmar - right time, right place, new challenges
- 3D printing gears up for fashion industry change
- Apparel working conditions linked to profit
- H&M adds transparency to yarn and fabric mills
- Morocco plans to grow fast fashion exports
- Cambodia growth to slow on competition and cost
- China cotton imports to rise as Xinjiang cuts crop
- Adidas launches "lightest ever" football boot
- Crystal first China licensee of RevoLaze tech
- Thailand project to vertically integrate clothing