Britain’s Marks & Spencer said on Wednesday it would accelerate the pace of its turnaround plan as it reported a 5 per cent fall in first-half profit, a second straight decline, hurt by sales falls and cost pressures.
M&S, one of the best known names in British retail, said it would speed-up the UK space rationalisation plan for clothing and homeware and reposition its food business, including slowing openings of Simply Food stores.
It also set a target for a third of its clothing and homeware sales to be made online and plans to “substantially” reduce its cost base.
The company's chief executive, Steve Rowe, is one year into a five-year turnaround plan he has said will dent short-term profits.
The 133-year-old M&S is battling to revive its fortunes after falling out of fashion over the last decade.
Its task is being made harder by a squeeze on consumers’ spending power as inflation rises and wage growth falters. Last week UK interest rates also went up for the first time in a decade.
“The business still has many structural issues to tackle as we embark on the next five years of our transformation, in the context of a very challenging retail and consumer environment,” said Rowe.
The group made a pretax profit before one-off items of £219.1 million ($288.18 million) in the 26 weeks to September 30th - ahead of analysts’ average forecast of £201 million but below £231.3 million made in the same period last year.
Second-quarter clothing and homeware like-for-like sales fell 0.1 per cent, having fallen 1.2 per cent in the first quarter. Same store food sales fell 0.1 per cent, the same as the previous quarter. Both outcomes were ahead of analysts’ expectations.
M&S also said chief financial officer Helen Weir is to leave the business as soon as a successor is found.
-Reuters
