LONDON — Marks & Spencer plc said Tuesday that first-half net profits rose 15.2 percent to 254.4 million pounds, or $396.6 million, versus 220.8 million, or $344.2 million, in the same period last year.
Revenues for the six months ended Oct. 2 rose 5.4 percent to 4.57 billion pounds, or $7.12 billion, compared with 4.34 billion, or $6.8 billion, in the year-ago period. All dollar figures have been calculated at average exchange rates for the period.
M&S said the rise in revenues reflected “the improvement in both market conditions and our product offer,” along with a boost from international stores, whose sales rose 3.8 percent. Clothing sales rose 7.3 percent during the half, while food sales were up 4.1 percent.
While the retailer said it has had “a good start to the second half,” the company expects “trading conditions to become more challenging as consumers’ disposable income comes under pressure from increased value added tax (VAT) rates and the impact of public spending cuts. In addition, we are facing increased commodity prices and tougher comparatives in the second half. As a result, we remain cautious about the outlook for the remainder of this year and next.”
M&S chief executive officer Marc Bolland laid out his three-year plan for the retailer Tuesday. Key planks include growing U.K. store space and online sales, and expanding M&S’s international business to achieve sales of between 800 million pounds and 1 billion pounds, or $1.29 billion and $1.61 billion at current exchange, by 2013 or 2014. In terms of clothing, Bolland said he wants to increase the role of the M&S brand, and give the retailer’s subbrands “more distinctive values, turning them from labels to real brands,” he said. One of M&S’s labels for older women, Portfolio, will now be phased into the core M&S brand, the company said. Bolland said he plans to invest an additional 300 million pounds, or $484.3 million, a year into M&S’s stores, systems and marketing. That will take M&S’s capital expenditure to between 850 million and 900 million pounds, or between $1.37 billion and $1.45 billion, each year.
The ceo aims for M&S to achieve group revenues of between 11.5 billion pounds and 12.5 billion pounds, or $18.56 billion and $20.18 billion, by 2013 or 2014. “We believe growth of this order, in stable economic conditions, is achievable,” the company said.