Marks & Spencer chief executive Steve Rowe has predicted that short-term profits will be negatively affected as the food and clothing retailer plans a new strategy after its full-year results.
The group reported a 3.5 per cent increase in underlying profits for the 52 weeks ending 26 March, to £684.1 million. Profit before tax, however, dropped by 19.5 per cent. Revenue increased by 0.8 per cent to £10.4 billion.
The UK retailer was buoyed by strong growth in its food department, which it said "outperformed a competitive market". Some 75 new Simply Food stores were opened in the 52-week period.
However, sales performance in its clothing & home division was "unsatisfactory, but actions are underway". It also reported difficult trading conditions in the international market as profit dropped by 39.6 per cent.
In its strategic update summary, the group promised to implement actions to grow its clothing and home division through lowering prices and improving its range. It also vowed to continue to grow the food business by building on its strengths.
Speaking about the results, Rowe outlined the retailer's priorities. “Our results last year were mixed. We continued to outperform on food but we underperformed on clothing and home sales. This is not satisfactory and today we are outlining our initial plans to address the issues and to position Marks & Spencer to deliver profitable sales growth.
“We are clear on the actions needed to recover and grow clothing and home, which is our top priority; to continue to grow our food business; and to focus on driving profitability. We are investing to re-establish our price position by sharpening prices and to enhance service by putting more employees into our stores.
“These actions, combined with the difficult trading conditions, will have an adverse effect on profit in the short term. We are, however, confident that our commitment to delivering the right product, price and service will help return clothing & home sales to growth. This, together with continued momentum in Food, will provide us with a solid base from which to build a long term sustainable business.”
© 2016 European Supermarket Magazine – your source for the latest retail news. Article by John Golden. To subscribe to ESM: The European Supermarket Magazine, click here.
