Profits rise as M&S makes market share gains

Despite a note of caution about prospects, Marks & Spencer also reported “a good start to the new financial year”.

In the first full-year under chief executive Marc Bolland, Marks & Spencer generated a 12.9% increase in underlying pre-tax profit to £714.3m on sales up 4.2% to £9.74bn.

Total general merchandise sales advanced 3.9% and were up 3.2% like-for-like in the 52 weeks to April 30. Food revenues rose 4.1% altogether, or 2.6% like-for-like.

The retailer said it increased its clothing market share by 50 basis points to 11.7% over the year, although gross margin was down 40 basis points as a result of factors including commodity price inflation and markdowns. Food market share rose by 10 basis points to 3.9% and gross margin was up 20 basis points.

Bolland said: “Marks & Spencer had a good year. We traded well in a challenging environment.

“We did this by offering customers great quality and value, with more choice through innovation.”

Bolland said “good early progress” was being made in implementing his strategy of making M&S a “truly international, multichannel retailer.”

From this autumn, M&S will begin piloting new space plans in-store, designed to reflect local customer characteristics such as age and affluence, use space efficiently and adjust the range accordingly, “meaning that stores of the same size will no longer necessarily carry the same catalogue”.

The retailer will also unveil a new in-store look and feel for clothing sub-brands and to demonstrate the freshness of the food offer. It will be unveiled at Stratford in September.

Multichannel sales increased 31% over the year and traffic to M&S’s website increased by 18% to 3 million visits per week.

International revenues climbed 6.1% to £1bn. Trading in Greece and the Republic of Ireland was hit by economic meltdown in those countries.