Blog: Leonie BarrieA mixed bag at M&S

Leonie Barrie | 22 May 2007

The good news is that Marks & Spencer’s recovery is gathering pace, with the UK’s biggest clothing retailer today posting full year profits up 28.5% to a nine-year high of GBP965.2m. Nearly back to the levels seen before it hit a trading blackspot in the late 1990s, the store group is also continuing to steal all-important market share from its competitors, particularly in children’s wear where it reported its first gain for six years. And the number of shoppers visiting M&S stores continues to rise, with 16m people a week now passing through its doors.

But there is bad news too. With a reticence – or should that be realism? – that we’ve come to expect from its CEO, Stuart Rose today warned that things are likely to get tougher this year. A challenging retail environment, tough comparatives and rising interest rates mean that M&S will be hard pushed to maintain the increases that have already led to seven straight quarters of growth. And a slower rise in same-store sales in the fourth quarter (clothing rose 4.6%, down from 7.1% growth in the third quarter) suggests this is indeed starting to happen.

M&S isn’t alone, of course, in having to face up to these challenges, and Rose identified the company as one of four UK retailers who are still increasing their share of the clothing market – the others being Tesco, Primark chain and New Look.

It is also optimistically forging ahead with store refurbishments and expansion plans in a bid to drum up more business. Internationally, M&S is looking at potential markets in Europe and the Indian sub-continent, and it has appointed Martha Lane Fox, one of the founders of Lastminute.com as a non-executive director whose experience should help increase e-commerce sales.

Strong clothing sales push M&S FY profit up 28.5%


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