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Annual Results

Mark & Spencer pre-tax profit falls

24 May 2017 07:22

Marks and Spencer reported adjusted profit before tax was 10.3% due to the expected decrease in clothing and home sales and increased costs of new space.

Significant adjusted items of £437.4m resulted in profit before tax down 63.5% in the 52 weeks to 1 April 2017 as the company established a base from which to grow.

Clothing & Home gross margin was up 105 basis points with full price sales growth of 2.7%. As expected, revenue declined 2.8% due to a planned reduction in promotions and clearance sales.

Food revenue growth rose by 4.2%, which was driven by new stores. Gross margin fell 25bps due to input cost inflation and higher than anticipated waste.

UK costs increased by 3.8% due to costs of new space, IT investment and inflation, offset by efficiencies.

International profit before adjusted items rose 15.4% to £64.4m, as a result of the decision to exit owned stores in 10 loss-making markets.

Strong cash generation reduced net debt by £204m while the full year dividend was unchanged at 18.7p.

Marks & Spencer CEO Steve Rowe said: "Last year we outlined a comprehensive plan to build strong foundations for the future.

"We said we would recover and grow clothing and home, continue with our plans for Food growth, remove costs and simplify the business.

"We achieved a huge amount in the year and whilst there is still much to do, I am pleased with our progress and we remain on track.

"As we have made improvements to our clothing and home product and proposition, our customers have noticed; we are starting to stabilise market share and importantly have seen full price market share growth, as we removed excessive discounting.

"In addition, our new food stores continue to exceed our expectations.

"As we anticipated, the planned restructuring of M&S has come with a cost and has impacted profits, but the business is still strongly cash generative and we reduced our net debt.

"Looking ahead, we will continue our programme of self-help in a tough trading environment."

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