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M&S profits drop as GM decline continues

Marks & Spencer has seen like-for-likes within its general merchandise decline yet again, with the retailer reporting a 1.5% drop for the 26 weeks to September 28.

General merchandise including new stores edged up marginally at 0.4%, but it was the ninth consecutive quarter that its like-for-likes fell.

Total sales in the UK grew 3.1% across the whole business, although much of this came from M&S’ food arm, which grew 5.3%. International also climbed up 8%, driving the total overall revenues to 3.6% for the period to £4.9bn.

However underlying profit before tax fell 9% from £287.3m to £261.6m in 2013, while net debt rose from £2.63bn to £2.79bn. Earnings per share also fell from 14.1p to 13.5p, although the interim dividend remained at 6.2p. 

M&S chief executive Marc Bolland praised growth on the food, international and online divisions, but noted that his key priority had been the relaunch of womenswear, which was first unveiled in May.

He said: “Although only in store for three weeks of the half year, our autumn 13 collection has been well received by customers, and we have seen some early signs of improvement.

“At the same time we continued to invest in the long term transformation of the business. We are pleased with the progress made, given the high level of activity and a number of key projects launching this year. This has led to a higher level of additional costs, which while planned for, have impacted short-term results. “

The business issued a note of warning around the “continued pressure on disposable incomes” and said it was “cautious about the outlook for the remainder of the year”, despite being “well set up for the key Christmas trading period”.

Readers' comments (3)

  • Is it the consumer or is it the competition. I am sure Next excellent results are having an impact. In order to put a business back on track you first need to be honest about what is happening.

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  • Richard Emmott

    UK Fashion competition is tough but for M&S the clock is certainly ticking for a stronger showing in GM and clothing. They used to be the bar to aspire to in UK clothing and now they need to relearn what made them great. So I agree honest appraisal is a good start.
    It is not just design but a shorter more flexible supply chain as you will never get every line right each season and collection. Here I believe they could still really improve.
    They had it in the past with UK manufacturing. They can still achieve it again with a combination of Asian and other suppliers hopefully closer to home.
    I for one wish them well.

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  • Stuart Rose was the wrong man for M&S and they've never recovered since. Bolland isn't the man either.

    Why don't M&S employ someone who can actually see what's going wrong and who makes the decisions to move the business on again?

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