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Marks & Spencer Profits Slide

In the first half, revenue was up 0.9 percent on a constant currency basis.

LONDON — Marks & Spencer Group plc said its pre-tax profits in the first half fell 9.7 percent to 289.5 million pounds, or $457.4 million, due to higher operating costs and sluggish sales growth in the six months to Sept. 29.

Analysts had expected first-half profits to decline 11 percent.

First half revenue was up 0.9 percent on a constant currency basis, and 0.4 percent at actual currency rates to 4.69 billion pounds, or $7.43 billion. Dollar figures have been converted at average exchange rates for the six months.

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Second-quarter group revenue climbed 2.5 percent on a constant currency basis, compared with a decline of 0.7 percent in the previous quarter, and were fueled by increases from the food and international divisions. Sales of general merchandise, which includes clothing, were broadly flat, and down 1.8 percent on a like-for-like basis.

The store, widely considered to be a bellwether for the U.K. high street, only supplied percentage figures for the second quarter.

Chief executive Marc Bolland said the market remains volatile, and the U.K. customer wary about spending.

“We are pleased to report a better performance across the business in the second quarter,” he said in a statement. “We took steps to address the short term merchandising issues in general merchandise and as a result, we delivered an improved performance. Food outperformed the market on a like-for-like basis.”

Recent trading, he added, has been volatile: “This, coupled with continuing pressure on consumers’ disposable incomes, makes us cautious about the outlook for the rest of this year. However, we are well set up for the Christmas trading period.”

 

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In the first half, Bolland said U.K. operating costs were up 2.9 percent on last year. “We continued to manage costs tightly despite upward pressures from new space, inflation and investment in business initiatives such as improved customer service in stores,” he explained.

Earlier this week, M&S said it had promoted Frances Russell to the position of director of women’s wear with immediate effect. Russell has been at M&S for four years, most recently as director of lingerie and beauty.

Annette Browne, the women’s wear trading director, had stepped down from her role and left M&S. The store said Janie Schaffer, currently chief creative officer at Victoria’s Secret, would succeed Russell as director of lingerie and beauty early next year.