UK food and clothing retailer Marks and Spencer has reported a sharp fall in profits in the year to 2 April 2005 and described the outlook as challenging.
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Profit before tax and exceptional items was £618.5m (US$1.13bn) compared with £805m in the previous year. Total turnover was £7.942bn, compared with 8.301bn last year.
“The outlook remains challenging, with tough economic and competitive conditions expected to continue” the company said. “We are focused on delivering better quality, value and styling across all our product ranges, as well as improving service levels and store environment. We have made good progress, however, there remains much to do.”
“The group’s financial performance for the year was disappointing,” said chief executive Stuart Rose. “Despite reducing stocks and commitment by some £1.3bn over the year, we had to take a high level of markdowns which severely impacted our operating profit. A new buying process and stock controls should enable us to deliver reduced markdowns in the coming year.”
“Our focus now is on profitable full price sales,” he said. “We have focused the business as promised, making structural changes to the Group and driving through initiatives to improve our operating efficiency.”
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By GlobalData“Prices are constantly monitored to maintain competitiveness,” he said. “We have reduced the total number of products by around 17% while creating more real choice and increased levels of new product in store.”
“Food sales were up 2.4% on last year, down 2.6% on a like-for-like basis,” he said. “Market share was broadly maintained across the year. In food, we have focused on innovation and newness, simplifying ranges, and emphasising the quality and uniqueness of our food.”
“We continue to benefit from additional footage as we extend our food offer through the Simply Food format,” he said. “During the year we opened 31 Simply Food stores of which 13 stores were in partnership with Compass. A further 20 Simply Food stores are planned to open in 2005/06.”
