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M&S posts flat first-half profits

Marks & Spencer reported a “good start” to its third quarter but is “cautious” about Christmas prospects after posting flat interim profits.

The retailer posted profit before tax of £306.7m in the 26 weeks to September 26 compared to £307.8m last year, although the adjusted figure was up to £298.3m from £297.8m. Sales rose 2.8% to £4.3bn, helped by a strong international performance. Like-for-likes in the UK slipped 0.9% - down 1.4% in general merchandise which includes clothing.

Market share

Executive chairman Sir Stuart Rose said he was pleased with the performance and M&S had increased its clothing market share by value by 10 basis points to 10.1%and volume share was level at 10.5%. Gross margin fell 30 basis points.

M&S said that clearer brand segmentation has been a key area of focus. In womenswear, M&S launched Portfolio and Indigo and in menswear it launched a designer collaboration with Jsen Wintle in Autograph. Marks & Spencer said that deamnd for a £199 wool coat in the latter range has led to a doubling of the initial order.

The retailer added that progress was made in areas of low market share. Indigo and the re-launched North Coast in menswear improved Marks & Spencer’s casualwear offer, helping to match its strength in formalwear.

M&S is also broadening its footwear and accessories ranges to “help customers refresh their wardrobe more economically”. M&S said that it autumn 09 had been the best ever season for boots and it has sold over 330,000 pairs to date.

Market share in kidswear continued to grow and M&S said it had strengthened its position in schoolwear despite discounting by value retailers.

It added that it had attracted a younger customer, growing market share in the 35 and under segment and attracted new customers with Limited Collection driving sales. M&S said that slimfit shirts are proving pop[ular with younger customers.

Price architecture

M&S said that its price architecture had allowed customers to trade up or down within ranges and highlighted its lingerie ranges, in which it has grown market share, as an example of value across all price points.

M&S said that removing duplication and delivering better ranging to the customer remains “a priority”. It added that it had “better integrated Per Una and is working on “avoiding duplication” with its other brands.

Multi-channel

Sales from M&S’ website, which was recently relaunched, rose 29% over the half. The online clothing market share increased to 4.8% from 4.2%. Traffic to the site grew by 30% over the half.

Christmas outlook

Rose said: “We continue to focus on providing better than ever value for our customers for the all-important Christmas period and into 2010.

“We have had a good start to the third quarter. However, the market remains competitive and, as we come up against volatile trading conditions last year, we remain cautious about the outlook for Christmas and the year ahead.

“We are increasingly confident that customers recognise and trust our outstanding quality, value and ethical stance.”

Christmas advertising campaign

The retailer also revealed its Christmas ad campaign, which will air on November 11. As well as M&S advertising regulars such as Twiggy and Myleene Klass, it features celebrities including Stephen Fry, James Nesbitt and Wallace and Gromit. For the first time there will be several different seasonal ads focusing on products ranging from clothing, home and food to Christmas dinner.

 

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