M&S cuts back growth targets as profits slide
MARKS & SPENCER, Britain’s biggest clothing retailer, has scaled back ambitious sales growth targets as it reported its first profit slide in three years.
The group yesterday revealed a one per cent drop in underlying profits to £705.9m for the year to 31 March, slightly ahead of analysts’ forecasts of £694m.
Chief executive Marc Bolland conceded yesterday that targets set out two years ago to grow sales by up to £2.5bn by 2013-14 had been made unrealistic due to “the deterioration in the economic climate”.
M&S now expects to achieve between £1.1bn and £1.7bn more in annual revenues by 2014, as disposable incomes remain squeezed and the outlook across the Eurozone is uncertain.
Bolland said austerity had become the new normal: “People are feeling the squeeze but they are a little bit more in control.”
Total sales grew by two per cent to £9.9bn in the year, with international sales up 5.8 per cent.
UK sales grew 1.5 per cent, driven by a strong performance at its food division, which saw sales rise 3.9 per cent. But general merchandising fell 0.9 per cent, with home down 10 per cent and clothing up just 0.2 per cent.
Bolland said efforts to revamp all of its UK stores to make them easier to navigate were working well, with the 92 newly refurbished stores showing a 2.5 per cent uplift in sales.
He said M&S was still on track to become an “international multi-channel” retailer and plans to have 10 websites worldwide and open 100 international stores by the end of year.