M&S outshines high street: H1 results

M&S outshines high street: H1 results

	Published : Wed, 09 Nov 2005 10:05 By : Andrew Stead Print this Story

LONDON: Marks & Spencer, one of the very few stores that shone out brightly during the current gloom on high street, announced a 19.6 percent rise in pretax profits for first half at £308.2 million.

The store’s earnings were slightly ahead of expectations but the bigger good news was that top-flight designer George Davies has decided to stay on until next July after which he will become chairman of the group.

Davies had quit the store last month after failing to persuade the management about a contract extension. Davies is credited with creating the successful Per Una brand which helped turn around the stores’ fortunes. According to his new contract, he will manage the brand full time until 30 June 2006 after which he will work at least two days a week as its chairman.

In the first quarter, sales had dipped 5.4 percent but picked up in the second quarter, rising 1.3 percent. Comparable sales in M&S’ UK stores had also seen a slight decline of 0.2 percent but international sales spiked 8.6 percent to £348.5m.

Despite the strong rise in its H1 profits, this leading retailer of clothing said trading environment would continue to be “difficult” but added that they looked ahead to the pre-Christmas trading period.

While most retailers are similarly anxious, the Confederation of British Industry and the British Retail Consortium sought to reassure the market that the decline in retail sales had slowed down last month. They pointed out that for many retailers same store sales had declined only slightly in October.

M&S had managed to stay ahead despite the tough trading environment by streamlining its supply chain, tightening costs and refurbishing in order to draw more shoppers into its stores. The store has set aside £500m of capital expenditure for the revamping of its 416-store chain.

The stores’ impressive performance during H1 is largely the accomplishment of chief executive Stuart Rose’s revival plan since he joined the firm last year.