Marks & Spencer beats forecasts on profits
Nov 5 2009 by Iain Laing, The Journal
MARKS & Spencer is stepping up the competition with other store chains after posting an unexpected rise in half-year profits.
Sir Stuart Rose announced profits of £298.3m for the six months to September 26, ahead of City forecasts of £285m and slightly stronger than a year earlier.
He added that the third quarter of the financial year had got off to a good start, although he warned that trading conditions remained competitive.
M&S has also revealed plans to sell around 400 branded products from firms such as Kellogg’s, Coca-Cola and Marmite across its UK store network.
The chain is rolling out the sale of branded household goods and groceries after a trial in stores in the North East and South East of England.
M&S said it could “simply never compete” with certain popular brands and was introducing them to its shops for the convenience of customers.
No M&S products are to be dropped as a result of the move, which will focus on lines where the retailer would have a lower share of the market such as soft drinks, beer, laundry and confectionery.
The company yesterday said it had increased sales by 2.8% to £4.3bn in the half-year period, helped by 12% growth overseas. UK revenues were 1.8% higher, but down 0.9% when changes in store space are excluded.
Sir Stuart, who is executive chairman, said: “We are pleased with our half-year performance. We increased our share of the clothing market over the period, and our performance in food has also improved.”
The company said tight management of costs and operating margins also enabled it to beat last year’s profits figure. The result represents a recovery from earlier in the year, when Marks announced a 40% drop in full-year profits to £604.4m and cut its annual dividend by 33% .
M&S said general merchandise sales were up 1.7% as it maintained its position as the UK’s leading clothing retailer by value and volume.
In food, sales were up 1.8% as Marks delivered its fourth consecutive quarter of improved like-for-likes sales, although market share slipped from 3.7% to 3.5%.
