Marks and Spencer, the UK retailer, said this morning (4 November) that half-year profits tumbled 34% as the weak economy hit the business.
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The company booked underlying pre-tax profits of GBP297.8m (US$467.7m) for the six months to 27 September, down from GBP451.8m a year earlier.
Underlying operating profit fell 23.7% to GBP372.4m.
The fall in profits came as M&S saw group revenue inch up 0.8% to GBP4.2bn but its like-for-like sales in the UK drop 5.7%. Like-for-like food sales declined 5.3%.
Chairman Sir Stuart Rose said the economic downturn had hit M&S during the last six months and he warned that the company was “cautious” about its outlook for the full year.
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By GlobalData“Market conditions and consumer confidence declined through the half, leading to reduced profits year on year, due to lower sales and investment in margin,” Sir Stuart said.
“Trading throughout October has been volatile with recent events in the financial markets and their impact on the wider economy further weakening consumer sentiment. We remain cautious about the outlook for the remainder of the year.”
M&S said its share of the UK food market had dipped from 4.3% to 4% during the year to 5 October due in part to “aggressive” pricing from its rivals and growing demand for lower prices from consumers.
The retailer said it was working to “realign” its prices and to focus on “fewer, larger, more targeted promotions” including its ‘Dine in for GBP10’ offer.
Outside the UK, sales were up 23.9% to GBP396.7m. Operating profit climbed 3.6% to GBP54.4m.
