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Rose sees no buds as M&S profits plummet by 40%
Jonathan Prynn and Simon English19 May 2009
M&S boss Sir Stuart Rose dismayed the high street today by stamping on hopes of a quick recovery.
M&S shares dropped 18.5p to 320.75p in early trading as disappointment swept through dealing rooms over his failure to deliver the expected signs of an upturn.
Sir Stuart blamed fears of another bank crisis for shoppers' refusal to spend in his stores. “We are not in green-shoots mode yet,” he said. M&S revealed that its profits collapsed by 40 per cent last year and that it had cut dividends by a third.
The results show that in two key M&S strongholds — women's clothing and food — the chain had failed to make the hoped-for breakthrough. M&S said it had been a “challenging year” for womenswear and revealed its share of food sales had fallen from 4.3 per cent to 3.9 per cent despite “dine in for two for £10” deals and other promotions.
The City had been relying on Sir Stuart to reveal hopeful signs of a spring recovery. However, the executive chairman warned that the best that could be said “is that it hasn't got any worse”.
He went on: “I am cautiously optimistic but there are two parts to the economy. On the one hand the consumer is fed up with being fed up, they want to spend. But on the banking side we don't know if there is anything around the corner that might disturb things.”
In its announcement of results for the year to 28 March, M&S added to the downbeat message by saying trading in the first seven weeks of the new financial year had been “broadly in line with trends experienced in the fourth quarter”.
Group sales last year rose 0.4 per cent to £9.1 billion but fell in the UK by 1.7 per cent overall and by 5.9 per cent on a directly comparable basis. Pre-tax profit slumped from £1.01 billion to £604.4 million. Like-for-like sales of clothing and home products were down 6.9 per cent and food by 5 per cent.
The retailer, which is celebrating its 125th anniversary this week, has been hit by competition from cheaper rivals in clothing such as Primark and TK Maxx and the big supermarkets and discount stores for food.
Bright spots included lingerie, which increased market share from 24.8 per cent to 25.2 per cent, and childrenswear with market share rising from 4.8 per cent to 5.4 per cent. Sales from the website were up 34 per cent and revenues from international operations rose 25.9 per cent.
Reader views (5)
I stoped shopping at M and S when I read where some of their profits were being channeled to back in the 60s.
- Thomas Hayes, Leeds UK, 19/05/2009 22:18
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Maybe the results would have been better if M&S had continued to cater for the older 'fashionable' woman. Many of their clothes are uninspiring and drab.
- Volpone, London, London, 19/05/2009 14:11
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I have been a devoted M&S customer BUT on several occasions i have forgotton my own environmentally friendly bags and asked if i may have an M&S Caried bag free NO was the response!!!!! and several of my friends also had this response and have stopped shopping at M&S! For goodness sake they are taking their stance on this matter too far and this has led to MANY people NOT shopping at M&S anymore!!!!! Very very petty on Sir Stuart Roses part.
- Jean, Surrey, 19/05/2009 12:59
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Or it might just be a reflection of the underlying performance of the M&S business.
Now that there are no predecessor's work to claim credit for, Mr Rose is increasingly under the pump.
- Scotty, london, 19/05/2009 11:57
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M&S has not benefited from a competitor going out of business, so probably is a far better representation of the true state of the high street.
- Dave Davies, Basingstoke, 19/05/2009 09:12
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