Marks & Spencer profits dip by almost one fifth |
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Published
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Tue, 24 May 2005 21:55
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Is M&S in a mess? Marks & Spencer have been hit hard this year as profits showed a 19 percent slide. The clothing and food retailer also admitted that it had lost a substantial market share as well, seemingly on all frounts.
Chief executive Stuart Rose was expectedly quite disappointed at this performance, "The outlook remains challenging, with tough economic and competitive conditions expected to continue. We are focused on delivering better quality, value and styling across all our product ranges, as well as improving service levels and store environment. We have made good progress. However, there remains much to do," he said. M&S has posted a pre-tax profit reduction of 19 percent, sliding to £618.5m ($1.13bn) from £805m last year.
| Mr. Rose remained optimistic, "Clearly we would like to do better. Clearly it is tough. The economic climate has turned out to be tougher than we forecast but we are on track," he emphasized. He said that M & S had spent the past year trying to improve its efficiency and hence the sales segment was largely ignored, "I believe we have the foundations in place to drive the business forward," he added.
M&S revealed that net profit for the year ended April 2 rose to £587m (US $1.07 billion; €850 million) from £552.3m in 2004, but revenue fell to 7.9 million pounds (US $14.45 million; €11.47 million) from £8.3m. "Despite reducing stocks and commitment by some £1.3 billion over the year, we had to take a high level of markdowns which severely impacted our operating profit," Mr. Rose said.
In the past year, retail sales fell by 1.7% to £7bn while like-for-like sales, fell by 5.1% M & S did poorly in the clothing segment as well with a 3.1 percent dip. Womenswear sales were particularly weak while menswear sales managed to hold steady. However, food sales brought some cheer and rose by 2.4%.
M & S plans to redesign a further 20 stores this year and also open about ten stores in out-of-town retail parks. Also on the anvil is the opening of Simply Food outlets eight BP fuel stations.
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