6th Nov 2019 07:56
(Alliance News) - High-street stalwart Marks & Spencer PLC on Wednesday said its transformation plan is progressing rapidly as it makes up for "lost time" in its Clothing & Home unit, which saw a "difficult" first half.
Revenue for the half-year to September 28 fell 2.1% to GBP4.86 billion, though pretax profit jumped 52% to GBP153.5 million. Profit before tax and adjusting items fell, however, by 17% to GBP176.5 million.
M&S booked just GBP23.0 million in adjusting items in the recent half year, compared to GBP111.7 million a year ago. This includes costs relating to strategic programmes in areas such as its UK store estate and IT restructure.
Like-for-like sales growth in the Food unit was 0.9% in the half-year, driven by volume. Clothing & Home like-for-like sales, meanwhile, fell 5.5%.
M&S said it saw an improved Clothing & Home performance in October following a "difficult" first half.
"Our transformation plan is now running at a pace and scale not seen before at Marks & Spencer. For the first time we are beginning to see the potential from the far reaching changes we are making," said Chief Executive Steve Rowe.
"In Clothing & Home we are making up for lost time. We are still in the early stages, but we are clear on the issues we need to fix and, after a challenging first half, we are seeing a positive response to this season's contemporary styling and better value product," said Rowe.
Looking ahead, M&S said some improvement in trading is expected in the second half, though market conditions remain challenging.
In Clothing & Home, net store closures are expected to reduce sales by around 2%, previously seen as causing a 3% hit. The gross margin is expected to fall by 25 to 75 basis points, previously having been expected to be between up 25 basis points and down 25 basis points.
UK operating costs will fall by around 1% to 2%, previously seen somewhere between flat and down 1.0%.
The retailer will pay an interim dividend of 3.9p, down 40% from a year ago. The dividend rebasing had been announced back in February.
By Lucy Heming; [email protected]
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