M&S reveals 62% annual profit slump to £66.8m

Rex Christensen
May 23, 2018

The 134-year-old M&S faces unrelenting competition from supermarkets, fashion chains like Zara, H&M and Primark, as well as online giant Amazon, while efforts to revitalise its business are being hampered by ongoing pressure on United Kingdom consumers' spending power.

The results were published one day after M&S revealed it will shut more than 100 "underperforming" United Kingdom stores in total.

British food-to-clothing retailer Marks and Spencer will shut more than 100 "underperforming" United Kingdom stores in an ongoing restructuring, it said Tuesday.

That was ahead of analysts' average forecast of £573m but down from £613.8m made in 2016-17.

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.

Commenting on the results Laith Khalaf, senior analyst at Hargreaves Lansdown, said M&S investors were essentially being asked to take a "leap of faith".

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Rowe's plan is the latest in a series of efforts to update the 134-year-old retailer, which has struggled to compete with the rise of cheap fast fashion chains and low-priced food retailers.

The stock closed yesterday at 292 pence, valuing the business at £4.7bn.

M&S announced 100 branch closures a day earlier as part of chief executive Steve Rowe's effort to overhaul the business.

"The team is now tackling transforming our culture to make M&S a faster, lower cost, more commercial, more digital business", he said, targeting sustainable, profitable growth in three to five years.

In the final quarter of 2017, like-for-like (LFL) food sales in the United Kingdom declined 0.4% year-on-year, joining the Clothing & Home division in the ex-growth doghouse; the latter saw LFL sales decline 2.8% from a year earlier. Worldwide sales fell 7.9 percent to 1,087.2 million pounds during the year while global profit before adjusting items more than doubled to 135.2 million pounds.

Mothercare, well known for maternity and baby products, will be shuttering 50 stores, while youth fashion chain New Look is closing 60 outlets.

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