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22 May 2019

Making Marks & Spencer special again?

High Street stalwart Marks & Spencer is teetering on the brink of relegation from the FTSE 100 after reporting a 10% drop in full-year profits.

However, Chief Executive Steve Rowe said the store continued to make good progress with its programme and was well on the way to becoming “special again.”

He said: “Whilst there are green shoots, we have not been consistent in our delivery in a number of areas of the business. M&S is changing faster than at any time in my career – substantial changes across the business to our processes, ranges and operations and this has constrained this year’s performance, particularly in Clothing & Home.”

According to the final full-year results released today (22nd May 2019), profit before tax and adjusting items was down 9.9% to £523.2m in the year to 30th March 2019, with UK food revenue down 0.6% and its clothing and home revenue down 3.6%, with store closures having an impact. Its net debt was reduced to £1.5bn.

Mr Rowe said the company was judging its results by the progress of its transformation programme as much as its financial figures.

Marks & Spencer has been a member of the FTSE 100 since 1984, but analysts have warned that its position could be in danger at the index’s next quarterly reshuffle on 5th June 2019. Roy Kaitcer, Investment Manager at Redmayne Bentley, said: “With ongoing tough conditions for most High Street stores, Marks & Spencer’s placement in the FTSE 100 has been looking precarious for some time.

“With its current market capitalisation of £4.41bn, among the lowest in FTSE 100 alongside easyJet (£3.9bn as at 22nd May 2019) and Hikma Pharmaceuticals (£4.09bn), the store has a battle on its hands to remain in the top index and investors will be hoping its transformation will bring back its former magic.”

Ends

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Making Marks & Spencer special again?

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