M&S says markets levelling as profits slide

Marks & Spencer said it was hopeful the downturn in its markets had levelled off as it posted a 40 per cent slide in full-year profits and slashed its dividend to conserve cash.



"I'm not into 'green shoots' mode but I am (thinking) maybe this is a plateau at the bottom," Executive Chairman Stuart Rose told reporters on a conference call.

"There's a push-pull going on at the moment between the consumer who is wanting to be more cheerful ... (while) there are still some issues in the financial markets which could destabilise things."

Many of Britain's retailers have been struggling as shoppers cut spending amid rising unemployment, sliding house prices and fears of a long recession.

However, fashion and homewares group Next Plc and floorings group Carpetright Plc have recently said the market may have bottomed out.

Rose said M&S' trading in the first seven weeks of its new financial year had been broadly in line with fourth quarter trends and it was cautious on the outlook for the year.

Sales growth was still negative, "but particularly in foods we've had an improving performance since the late part of last year," he said.

"I anticipate that we can keep that going and I'm hopeful that the sales level in clothing will slowly improve."

Shares in M&S have lost 18 per cent of their value over the last year but have risen 23 per cent over the last three months on recovery hopes, outperforming the DJ Stoxx European retail index .SXRP by 15 per cent.

The stock was down 7 per cent at 315.75 pence at 0951 GMT, valuing the business at £4.77 billion.

"Overall it looks a bit underwhelming", said Nick Bubb, analyst at Pali International.



PRESSURE ON ROSE

The 125-year-old group, which is the UK's biggest clothing retailer, said it made an underlying pretax profit of 604.4 million pounds ($927.5 million) for the year to March 28.

This compares with analysts' consensus forecast of £603 million, according to a company poll of 34 analysts, and with

£1 billion pounds made in the previous year. Sales were up 0.4 per cent at £9.1 billion.

M&S, which ended the year with net debt of £2.5 billion, said it was re-basing its dividend payment to 15 pence from the 22.5 pence paid in 2007/8, a reduction of one third.

This would be achieved through a one third cut in the final dividend to 9.5 pence, followed by a reduction in the 2009/10 interim dividend to 5.5 pence.

The cut is a blow to M&S' army of about 213,000 small investors. They own about 21 per cent of the firm's equity and played a major role in thwarting billionaire retailer Philip Green's takeover attempt in 2004.

It will pile more pressure on Rose, who just 12 months ago raised the total dividend payout by 23 percent and who was already under fire from investors for combining the roles of chairman and CEO against corporate governance best practice.

Two of the internal candidates to succeed Rose in 2011 as CEO have been given additional responsibilities.

M&S said Ian Dyson, finance and operations director, will be in charge of the '2020 - Doing the Right Thing' change programme, while Kate Bostock, executive director clothing, will also head the home business.

However, Carl Leaver, the head of the international division who was once seen as a contender, will leave the group shortly.

M&S said planned new openings in 2009/10 would add about 3 per cent to total space in the UK and 20 per cent in the international division.

It forecast its UK gross margin would fall by 125 to 175 basis points, with UK operating costs falling by 1 percent and capital expenditure declining 36 per cent to £400 million.

Arts and Entertainment
Benedict Cumberbatch has refused to deny his involvement in the upcoming new Star Wars film
filmBenedict Cumberbatch reignites those Star Wars rumours
News
Russell Brand has written a book of political analysis called Revolution
peopleFilm star says he is 'not interested in making money anymore'
News
newsMcKamey Manor says 'there is no escape until the tour is completed'
News
people

Britain First criticised for using actress's memory to draw attention to their 'hate-filled home page'

PROMOTED VIDEO
Arts and Entertainment
JK Rowling is releasing a new Harry Potter story about Dolores Umbridge
booksChristmas comes early for wizard fans
News
news

Emergency call 'started off dumb, but got pretty serious'

News
news
Arts and Entertainment
On The Apprentice, “serious” left the room many moons ago and yet still we watch
tv

Greatest mystery about the hit BBC1 show is how it continues to be made at all, writes Grace Dent

Voices
Hunted: A stag lies dead on Jura, where David Cameron holidays and has himself stalked deer
voicesThe Scotland I know is becoming a playground for the rich
News
i100
News
ebooksAn unforgettable anthology of contemporary reportage
Arts and Entertainment
filmsOculus Rift offers breathtakingly realistic simulation of zero gravity
Sport
footballAccording to revelations from Sergio Aguero's new biography
Life and Style
tech

News
people'When I see people who look totally different, it brings me back to that time in my life'
Arts and Entertainment
A scene from David Ayer's 'Fury'
film

"History is violent," says the US Army tank commander Don "Wardaddy" Collier

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Compensation and Benefits Manager - Brentwood - Circa £60,000

£60000 per annum: Ashdown Group: Compensation and Benefits Manager - Compensat...

Data Analyst/Planning and Performance – Surrey – Up to £35k

£30000 - £35000 Per Annum plus excellent benefits: Clearwater People Solutions...

IT Systems Business Analyst - Watford - £28k + bonus + benefits

£24000 - £28000 per annum + bonus & benefits: Ashdown Group: IT Business Syste...

Markit EDM (CADIS) Developer

£50000 - £90000 per annum + benefits: Ampersand Consulting LLP: Markit EDM (CA...

Day In a Page

Wilko Johnson, now the bad news: musician splits with manager after police investigate assault claims

Wilko Johnson, now the bad news

Former Dr Feelgood splits with manager after police investigate assault claims
Mark Udall: The Democrat Senator with a fight on his hands ahead of the US midterm elections

Mark Udall: The Democrat Senator with a fight on his hands

The Senator for Colorado is for gay rights, for abortion rights – and in the Republicans’ sights as they threaten to take control of the Senate next month
New discoveries show more contact between far-flung prehistoric humans than had been thought

New discoveries show more contact between far-flung prehistoric humans than had been thought

Evidence found of contact between Easter Islanders and South America
Cerys Matthews reveals how her uncle taped 150 interviews for a biography of Dylan Thomas

Cerys Matthews on Dylan Thomas

The singer reveals how her uncle taped 150 interviews for a biography of the famous Welsh poet
DIY is not fun and we've finally realised this as a nation

Homebase closures: 'DIY is not fun'

Homebase has announced the closure of one in four of its stores. Nick Harding, who never did know his awl from his elbow, is glad to see the back of DIY
The Battle of the Five Armies: Air New Zealand releases new Hobbit-inspired in-flight video

Air New Zealand's wizard in-flight video

The airline has released a new Hobbit-inspired clip dubbed "The most epic safety video ever made"
Pumpkin spice is the flavour of the month - but can you stomach the sweetness?

Pumpkin spice is the flavour of the month

The combination of cinnamon, clove, nutmeg (and no actual pumpkin), now flavours everything from lattes to cream cheese in the US
11 best sonic skincare brushes

11 best sonic skincare brushes

Forget the flannel - take skincare to the next level by using your favourite cleanser with a sonic facial brush
Paul Scholes column: I'm not worried about Manchester United's defence - Chelsea test can be the making of Phil Jones and Marcos Rojo

Paul Scholes column

I'm not worried about Manchester United's defence - Chelsea test can be the making of Jones and Rojo
Frank Warren: Boxing has its problems but in all my time I've never seen a crooked fight

Frank Warren: Boxing has its problems but in all my time I've never seen a crooked fight

While other sports are stalked by corruption, we are an easy target for the critics
Jamie Roberts exclusive interview: 'I'm a man of my word – I'll stay in Paris'

Jamie Roberts: 'I'm a man of my word – I'll stay in Paris'

Wales centre says he’s not coming home but is looking to establish himself at Racing Métro
How could three tourists have been battered within an inch of their lives by a burglar in a plush London hotel?

A crime that reveals London's dark heart

How could three tourists have been battered within an inch of their lives by a burglar in a plush London hotel?
Meet 'Porridge' and 'Vampire': Chinese state TV is offering advice for citizens picking a Western moniker

Lost in translation: Western monikers

Chinese state TV is offering advice for citizens picking a Western moniker. Simon Usborne, who met a 'Porridge' and a 'Vampire' while in China, can see the problem
Handy hacks that make life easier: New book reveals how to rid your inbox of spam, protect your passwords and amplify your iPhone

Handy hacks that make life easier

New book reveals how to rid your email inbox of spam, protect your passwords and amplify your iPhone with a loo-roll
KidZania lets children try their hands at being a firefighter, doctor or factory worker for the day

KidZania: It's a small world

The new 'educational entertainment experience' in London's Shepherd's Bush will allow children to try out the jobs that are usually undertaken by adults, including firefighter, doctor or factory worker