Premium retailer Marks and Spencer has posted a drop in profit for the third year running although food like-for-like sales rose by 1.7 per cent.
Underlying profit before tax for the full year fell by 3.9 per cent to £623 million. Total like-for-like sales increased by 0.2 per cent, with a focus general merchandise driving group sales up by 2.7 per cent.
M&S confirmed that it will increase store space by one per cent during the next year, 2.5 per cent of which will be in food. “Our strategy is to be more specialist and focus on quality and innovation,” a company statement said.It added that rather than joining the trend for discounting taking place across other retailers, M&S will instead focus on “top-quality” ranges with a fair deal for farmers.
Chief executive Marc Bolland said the M&S food business had a “very strong year” and insisted the company has made progress.
'Three years ago, we recognised the scale of investment required to transform our business, investing to strengthen our foundations and improve our customer offer. We are making solid progress on this journey and are now focused on delivery,' he said.
But Julie Palmer, retail expert and partner at business recovery specialists Begbies Traynor, said Bolland's reassurances will fall on deaf ears.
“As profits fall for a twelfth consecutive quarter against an improving retail backdrop in the UK, both investors and shoppers alike are still waiting for M&S to turn its luck around,” she said.
“Like Moyes following Ferguson as manager of Manchester United, Marc Bolland had big shoes to fill when he replaced Stuart Rose in 2010. But I expect he has at least another 12 months' grace period to prove that his expensive programme of investment can pay dividends and improve margins.
“If not, we could see further management changes and acquisition rumours as the company’s current share price makes it an increasingly attractive target.”
Palmer said that a top priority for M&S must be to get its website “firing on all cylinders'.
No comments yet