Despite a slight turnover increase, British Marks & Spencer’s pre-tax profit has more than halved. Clothing sales were a major factor, as they experienced a turnover drop.
Continue new strategy
Marks & Spencer’s total turnover grew 2.2 % to 10.62 billion pounds (12.3 billion euro) compared to the year before, but its pre-tax profit dropped 63.5 % to 176.4 million pounds (205 million euro) and its post-tax profit even slumped 71.1 %.
Food sales went up 4.2 % in the past fiscal year, mainly thanks to new Simply Food stores. Turnover for the Clothing & Home division dropped 2.8 % because of major discounts it is forced to give to help spur clothing sales. Only last year, Marks & Spencer cut about 10 % of its Clothing & Home collection and it wants to continue its collection restructuring plan, albeit with fewer discounts.
“Last year we outlined a comprehensive plan to build strong foundations for the future. We said we would recover and grow clothing and home, continue with our plans for Food growth, remove costs and simplify the business. We achieved a huge amount in the year and whilst there is still much to do, I am pleased with our progress and we remain on track”, CEO Steve Rowe said.
The new strategy did not come cheap, which explains its enormous profit drop. It spent more than 130 million pounds (150 million euro) to shut down onerous international stores, for instance.
