LONDON — Marks & Spencer plc, the iconic British retailer which is losing clothing market share to companies from H&M to the big U.K. supermarket chains, said Tuesday that pretax profits would drop between 9.2 percent and 12.3 percent in the first half, due in part to exceptional charges and a decline in sales.
The company noted in a second-quarter trading statement Tuesday that pre-tax profits for the 26 weeks to Oct. 2 would be between 285 million pounds, or $517 million, and 295 million pounds, or $535 million, compared with 325 million pounds, or $528.1 million, for the corresponding period last year. Dollar figures were converted at the average exchange rate.
The company plans to issue full interim results on Nov. 9.
The statement said exceptional charges in the first half are expected to be around 80 million pounds, or $145.2 million. Those charges include the closure of the Lifestore project, the M&S head office move and restructuring program, and the cost of defending the company from the takeover bid by retail tycoon Philip Green last summer.
Meanwhile, M&S didn’t deliver any surprises with regard to sales in the second quarter. The company posted an overall sales decline of 1.8 percent in the period, with clothing falling by 3.6 percent.
Last month, M&S had said that sales during the summer were “difficult,” with poor performance in core women’s wear, lingerie and children’s wear.
The Per Una line of women’s clothing — which as reported earlier this month M&S purchased from its creator George Davies — performed well in the 12 weeks to Oct. 2. The company released percentage changes only in Tuesday’s statement.
Meanwhile, sales at Marks & Spencer’s home division fell 21.4 percent in the period. As reported, the much-heralded M&S Lifestore project has been canceled and replaced with a more traditional concept that focuses on the core categories of bath, bed and kitchen.
“[The results are] no worse than expected,” Richard Ratner, head of equities research at Seymour Pierce, said. “Clothing actually performed better than anticipated, although that’s probably related to the colder weather. As for home, it’s going to be a long, slow haul to recovery.”
On a brighter note, the firm’s food sales climbed 2.9 percent.
“Undoubtedly the middle market has been getting tougher,” M&S chief executive Stuart Rose told company directors and delegates at the Barclays bank retail conference last week.
“There is savage price deflation. In spite of our problems, M&S is a business with significant strength.”