M&S reports 40% drop in profits

BRITISH retail giant Marks and Spencer (M&S) has reported a 40% drop in full-year profits for the 12 months to the end of March and announced the need for “a step-change” in the way it services its customers and operates its business.

Pre-tax profits for the year totalled £604.4 million (€688m) – down from a little more than £1 billion at the end of the previous year. Operating profit was down from £1.09bn to £768.9m (€874.897). Adjusted earnings per share fell from 43.6p to 28p.

While international sales rose 25.9% over the 12 months, sales in the group’s Britain and Ireland division grew only 0.4% on a year-on-year basis.

As a result, M&S is looking to drive growth in its international business, with specific focus on China, India, and central and eastern Europe.

The company opened a further 32 stores outside of Britain and Ireland during the year, taking its international store count to 296 across 40 countries.

Once one of the jewels in the M&S crown over a long period, the group confirmed yesterday that its Irish operation was “the most affected by the weakness in the local economy”.

Management said yesterday that trading performance for the first seven weeks of the company’s current financial year had been “broadly in line with trends experienced in the fourth quarter” and added that it remains cautious about the outlook for the remainder of the year. It is due to formally report its first-quarter figures at the beginning of July.

“During the year we acted decisively to meet the challenges of the economic downturn, responding quickly to the changing needs of our customers, managing costs tightly and protecting our balance sheet. We sharpened our values without compromising on quality. We believe this, together with our investment programme, is creating stronger foundations for long-term growth,” said& chairman Stuart Rose.

Yesterday’s results also showed a first cut in the company’s dividend payments to shareholders for nine years – from 22.5p to 15p, with another year-on-year cut to come at the halfway stage of its current financial year.