Clothing and home sales at Marks & Spencer fell by 2.8% year on year in the 52 weeks to 1 April, contributing to plummeting profits as the retailer grapples with the costs of opening new stores and changing its organisational structure.
Profit before tax at M&S was down 63.5% on the year before. Its adjusted profit before tax – taking out one-off costs such as changes to its pay and pensions, the restructuring of its UK head office and a review of its UK and international store estate – fell 10.3%.
Group revenue was up 2.2%. However, clothing and home sales fell 2.8% as a result of a reduction in the number of promotions and clearance Sales during the year. Like-for-like sales in this division were down 3.4%.
M&S pointed out that Easter fell outside its full year in 2016/17, which had an adverse impact on the final quarter.
Gross margin in clothing and home was up 105 basis points, driven by a 2.7% growth in full-price sales.
M&S chief executive Steve Rowe said: “Last year we outlined a comprehensive plan to build strong foundations for the future. We said we would recover, and grow clothing and home, continue with our plans for food growth, remove costs and simplify the business. We achieved a huge amount in the year and, while there is still much to do, I am pleased with our progress, and we remain on track.
“As we have made improvements to our clothing, and home product and proposition, our customers have noticed: we are starting to stabilise market share and importantly have seen full-price market share growth, as we removed excessive discounting. In addition, our new food stores continue to exceed our expectations.
“As we anticipated, the planned restructuring of M&S has come with a cost and has impacted profits, but the business is still strongly cash generative and we reduced our net debt.
“Looking ahead, we will continue our programme of self-help in a tough trading environment. We remain committed to delivering for our customers and shareholders as we build sustainable foundations for the future.”