LONDON — Net profit at Marks & Spencer plc fell 6.5 percent to 458 million pounds, or $723.6 million, in the fiscal year ended March 30, on the back of broadly flat sales and increased costs.
Group revenue in the period edged up 0.9 percent to 10.03 billion pounds, or $15.85 billion, with sales in key categories down.
Dollar figures have been converted from the pound at average exchange rates for the 12-month period.
Sales of general merchandise, which includes men’s and women’s wear, were down 2.4 percent, with underlying sales down 4.1 percent.
“We faced difficult trading conditions over the course of last year, with a highly promotional clothing market and unseasonal weather. Against this backdrop, we focused on full-price sales and more effective management of markdown, thereby protecting our gross margin,” the company said in a statement. “At the start of the financial year we identified merchandising issues in our spring/summer 2012 clothing collections. We took decisive action, appointing a new management team and delivering improvements in our operational execution through better availability and stock management. The improvement in product will take time to come through, but our customers will start to see the benefits of the changes from this summer.”
As reported, M&S has vowed to make quality a top priority going forward, and has significantly revamped its women’s offer with more youthful, on-trend clothing.
The store is also launching a Best of British men’s and women’s capsule collection of clothing and accessories made entirely in Britain. It will launch in-store in October.
M&S said that trading in the first seven weeks of the current financial year has been “in line” with the company’s expectations.
“Despite the challenging market conditions, we are focused on delivering our plan to transform M&S into a leading international multi-channel retailer. As we enter the third year of our transformation, we are encouraged by the significant progress we have made,” the statement said.
Last year, operating profit in the U.K. was down while costs increased. Profits in the international businesses also declined. The company said franchise operating profits were down 3.9 percent, with the European franchise partners’ trading environments impacting on business.
At M&S wholly-owned international stores, operating profits were down 39 percent due to continued macroeconomic pressures in Europe combined with initial start-up costs in priority markets, the company said.
In other news, M&S said that Steven Sharp, executive director, marketing, will be retiring from the business at the end of February. He joined M&S in 2004, and played a significant role in shaping the M&S brand through numerous ad campaigns, the statement said.
Estée Lauder Companies veteran Patrick Bousquet-Chavanne will take over responsibility for marketing, and will be put forward for election to the board as executive director, marketing and business development at the AGM on July 9, 2013.
Bousquet-Chavanne joined M&S in September 2012 as director of strategy implementation and business development, and played a key role in the development of the new marketing strategy in women’s wear, M&S said. He was previously a group president at Estée Lauder.