- Marks & Spencer full-year pre-tax profits drop 18.5%
- New boss Steve Rowe labels clothing and home performance “unsatisfactory”
- Rowe to focus on product quality, price and customer experience to rejuvinate the division
- But he warns his plan will have an “adverse effect” on short-term profits
M&S has posted a slump in full-year profits as new boss Steve Rowe warned his strategy will have an “adverse effect” on short-term earnings.
The high street stalwart revealed that pre-tax profit dropped 18.5% to £488.8m, driven down by UK store review costs, asset write-offs, IT improvements and one-off impairments within its international business.
On an underlying basis, stripping out the effect of those charges, M&S said pre-tax profits grew 4.3% to £689.6m after group sales advanced 2.4% to £10.6bn in the 53 weeks to April 2.
The retailer’s sales uplift was buoyed by “strong growth” in its food business, which offset a turbulent year for its clothing and home division.
M&S opened 75 new Simply Food stores during the period, which it said are performing “ahead of expectations”, but it labelled sales in its clothing and home division “unsatisfactory.”
New boss Rowe, who took the reins from Marc Bolland earlier this year, has placed rejuvenating the fortunes of M&S’s troubled fashion category at the top of his to-do list and today outlined measures to return the sector to its former glory.
However, Rowe warned that his strategy to breathe new life into the division “will have an adverse effect on profit in the short term.”
The M&S lifer’s three-point plan to transform its fashion business will centre on re-establishing its “style authority” by focusing on “accessible products” shoppers can “wear with confidence” and driving product quality.
Rowe also aims to make M&S’s fashion and home proposition more competitive on price and wants to enhance the overall customer experience by making stores easier to shop and streamlining ranges.
Rowe admitted M&S had “lots of opportunities to improve” but said he would put customers “right at the heart of our business” in his bid to do that.
He added: “Our results last year were mixed. We continued to outperform on food but we underperformed on clothing and home sales.
“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 and home sales to growth.”