Marks & Spencer has posted a fall in half-year profitability and revealed that its chief finance officer Helen Weir is quitting the business.
The high street stalwart said profit before tax and adjusted items – its preferred internal measure of performance – slipped 5.3% to £219.1m in the 26 weeks to September 30, following investments in various strategic initiatives.
M&S ploughed £100.8m into a number of programmes, including reshaping its UK store estate, reorganising the business structurally and closing shops overseas.
However, on a statutory basis, stripping out the impact of adjusted items, M&S said pre-tax profit more than quadrupled to £118.3m, up from just £25.1m a year ago.
The retailer’s like-for-like sales fell 0.3% across the group, as comparable sales declined across both its food and clothing and home divisions.
Like-for-likes in M&S’ food business inched down 0.1%, better than analysts’ expectations of a 0.3% drop, while same-store sales in its troubled clothing and home arm were also ahead of forecasts, despite falling 0.7%.
Group revenues advanced 2.6% to £5.12bn during the six-month period.
The results were unveiled as M&S finance boss Weir prepares to step down from the retailer.
Weir is quitting in order “to pursue a plural career”, M&S said in a separate statement, but will remain in place as chief financial officer until a successor is found.
Sky News reported that headhunters at Redgrave Partners have already been instructed to lead the search for her replacement.
M&S hailed the “good progress” it had made during the past 18 months in “restoring the basics” of the business as boss Steve Rowe and chairman Archie Norman battle to transform its fortunes.
The retailer said it had cut the price of 2,500 lines during that time and improved product availability.
As a result of lower prices, fewer promotions and two fewer clearance Sales, full-price sales in its clothing and homewares division were up 5.3% during its first half, while gross margins climbed 140bps.
Overall food sales increased 4.4% during the period, but that was driven by new store openings.
“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”
Steve Rowe, M&S
M&S revealed earlier this year that it was streamlining its bricks-and-mortar portfolio in clothing and home, and said today it would “accelerate” that transformation plan in order to “face into long-term structural change in our marketplace”.
The business added that it would “reposition” its food business, “slowing” the rollout of its largely successful Simply Food stores as it faces into “stronger headwinds” in grocery.
M&S said the next phase of its plan would also include moves to “substantially” reduce its cost base, “modernise” its supply chain and take a third of its clothing and home sales online.
It will also work more closely with its international franchise partners to hone its overseas proposition and improve availability.
M&S’ profits from international stores trebled to £60.3m during the half year, driven by “favourable” currency movements and moves to pull out of a number of markets.
Chief executive Rowe said: “We have made good progress in remedying the immediate and burning issues at M&S I outlined last year. In clothing and home early results are encouraging and in international we now have a profitable and robust business.
“We recognise now that we face stronger headwinds in food which will be addressed in the year ahead.”
Rowe added: “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.
“Today we are accelerating our plans to build a business with sustainable, profitable growth, making M&S special again.”
Marks & Spencer chief executive Steve Rowe will be speaking at Retail Week Live, the UK’s premier festival of retail and consumer commerce taking place in London on March 7-8, 2018. To book your ticket visit: Live.Retail-Week.com