M&S rejigs management as profits crash
Marks & Spencer saw profits tumble from £1 billion to £604.4 million for the 52 weeks ended March 28, prompting a reshuffle of its management team which has resulted in the departure of director Carl Leaver.
M&S said sales rose 0.4% over the year to £9.1 billion but UK sales fell 1.7%.
UK like-for-likes were also in negative territory, down 5.9% across the business and down 6.9% within general merchandise, which includes clothing.
“As we start our 125th anniversary we do so with an unrivalled reputation for quality, value, service, innovation and trust. These core values are as important today as they ever have been.”
Sir Stuart Rose, executive chairman, Marks & Spencer
However M&S said it had maintained its market leading position in fashion, holding market share by both value and volume over the year. Clothing share by value was 10.7% for the 52 weeks to March 29, according to data from TNS FashionTrak. By volume clothing share was 11.2% over the year (for more fashion performance scroll down).
Gross margin fell by 170 basis points to 41.3% after M&S opted to retain brand loyalty by offering customers discounts and price promotions.
The retailer has cut its dividend to 15p per share from 22p the previous year.
M&S said trading for the first seven weeks of the new financial year had been broadly in line with trends experienced in the fourth quarter, when UK like-for-like sales were down 4.2% for the 13 weeks ended March 28.
Executive chairman Sir Stuart Rose said that he remained cautious about the outlook for the remainder of the year.
Future plans & management reshuffle
M&S executive chairman Sir Stuart Rose said the board had completed a thorough review of the business over the last six months which had highlighted the need to accelerate changes it has been making to its business. Its action plan comes under the banner “2020 - Doing the Right Thing”. It will be led by group finance and operations director Ian Dyson.
Key plans of action include:
- increase pace of change and operational execution
- accelerate multi-channel development
- drive developments in International
- re-focus brand communication
Carl Leaver, director of international business, home and M&S Direct, has decided to step down from the business after home was shifted to come under executive director for clothing Kate Bostock and M&S Direct was brought under the responsibility of retail director Steve Rowe. Leaver will leave within two to three months. Leaver’s departure will come as a surprise to the market as he had been tipped as a potential future chief executive of M&S.
M&S said it would announce a replacement for Leaver in due course.
International sales rose 25.9% over the year and M&S said it was committed to adding 20% of space overseas next year. China, India and Central and Easter Europe will be key targets.
M&S said that it had been a challenging year for menswear and womenswear but that it had made good prohress in market share in kidswear and lingerie.
Lingerie market share rose to 25.2%, up from 24.8%.
Kidswear market share rose from 4.8% to 5.4% - the best performance for seven years.
Within menswear, M&S said it had continued to simplify its sub-brand offer but admitted there was more work to do. This autumn M&S will relaunch its tailoring range Collexione and expand its Autograph Essentials sub-brand as well as improving casual sub-brand Blue Harbour.
Online sales rose 34% to £324m, with online clothing market share up from 4.5% to 5.3%.
View M&S’ autumn 09 womenswear collection here.
Click the attached Pdf file on the right of the page for the full results annoucement from M&S.
- Separately, The Daily Telegraph reported that two former M&S executives had joined George at Asda. Arman Djemil and Steve Jackson have joined the menswear and boyswear departments at George, which is headed by Anthony Thompson, a former M&S director.