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M&S reveals another year of falling profits

M&S reveals another year of falling profits

"A sharp jump in Marks & Spencer's shares this morning means that the retailer got its news management right, by releasing the details of big store closures ahead of its results, but the numbers themselves are nothing to be proud of and show just how much work there is still to be done", said Russ Mould, investment director at AJ Bell.

Yesterday the retailer revealed the next 14 stores due to for closure under its programme.

"Marks & Spencer has held a spot in the FTSE 100 since the index began in 1984".

M&S chief executive Steve Rowe said there was need for "accelerated change" at the retailer.

"And we're concentrating on tackling the culture of the business, making M&S a faster, lower cost and more commercial digital business".

Excluding the restructuring charge, the stores group's adjusted pre-tax profit was down 5.4% to £580.9mln from £613.8mln a year ago, weighed by a 140 basis points drop in the food gross margin as a result of a weaker pound pushing up input cost inflation.

"This is vital as we start to leverage the strength of the M&S brand and values across a family of businesses to deliver sustainable, profitable growth in three to five years". This includes GBP321.1 million related to the United Kingdom store estate, up from GBP51.6 million the year before - as it accelerated "transformation plans" - with a GBP15.5 million cost related to its IT restructure.

After taking account of adjusted items of £514.1m, including £321.1m of charges relating to store closures, pretax profit at M&S was £66.8m for the year ending 31 March 2018, a 62.1pc fall year-on-year.

Turnover was broadly flat at 10.7 billion pounds.

FTSE 100-listed Marks & Spencer PLC said on Wednesday that profit slumped in its recently ended financial year, as it works to rectify "a number of structural issues".

M&S lost more ground in its fourth quarter, with like-for-like clothing and home sales down 3.4 percent, worse than the previous quarter's 2.8 percent drop, and same store food sales down 0.6 percent, against a third quarter fall of 0.4 percent.

Analysts expect Primark to overtake in the near future with many suggesting that it could happen as early as next year.

"The frustration for long-only investors is that M&S has been in perpetual transition but there remains the need for more patience".

M&S is not alone in finding the going tough. New Look, Mothercare (MTC.L), Carpetright (CPRC.L) and House of Fraser are all shutting stores.

And Toys R Us, electricals group Maplin and drinks wholesaler Conviviality have all collapsed this year.

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