London: Bellwether British retailer Marks and Spencer (M&S) posted a second consecutive year of falling first-half profit, reflecting mistakes in its clothing offer and the pressure facing UK consumers.
The 128-year-old group, Britain’s biggest clothing retailer which also sells homewares and upmarket food, said on Tuesday that recent trading had been “volatile”, making it cautious about the outlook for the rest of the year.
But M&S, which trades from 730 UK stores to 21 million Britons a week, and has 390 stores in 44 countries overseas, said it was “well set up” for the Christmas trading period, its busiest time of the year.
The firm made a profit before tax and one-off items of £297 million ($474.4 million) in the 26 weeks to 29 September.
That was at the top end of analyst forecasts of £250-305 million and ahead of a consensus of £280 million, according to a company poll, but down from a pro-forma £307 million in the same period last year.
Sales from M&S’ British stores open over a year were flat in the second quarter, with a 1.8% fall in general merchandise sales offset by a 1.6% rise in food.
Analysts had forecast a 2.5% fall in general merchandise like-for-like sales and a 1.5% rise in food.
The general merchandise performance represented a significant improvement on a 6.8% slump in first quarter like-for-like sales blamed on wet summer weather and stock management issues that left stores short of bestselling womenswear lines.
“We took steps to address the short term merchandising issues in general merchandise and as a result, we delivered an improved performance,” said chief executive Marc Bolland.
Bolland is half way through a three-year plan to make M&S an international, multi-channel retailer—connecting with customers through stores, the internet, tablets and mobile phones. The firm is spending £2.4 billion over three years, investing in store re-vamps, logistics, IT and systems.
Shares in the company have risen 14% over the last three months, buoyed by persistent speculation regarding a possible offer from private equity or a sovereign wealth fund.
The stock closed Monday at 387.9 pence, valuing the business at £6.24 billion.
M&S ended the half with net debt of £2.6 billion and is paying a maintained interim dividend of 6.2 pence.