M&S says markets levelling as profits slide
Tuesday 19 May 2009
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.
elephant appealThe first 23 lots have now gone. But there are 22 more still up for grabs
comedy'Fresh Meat' star sees off stiff competition from Alan Carr, David Mitchell, Graham Norton, Lee Mack and Sarah Millican to win top prize
Beatles rush out 'bootleg' album to defy EU copyright law
healthJames Bond's alcohol consumption puts him at 'high risk' of cirrhosis, tremors... and impotence
musicPolice chief rejects rappers' claims that his work is as dangerous as law enforcement or military service
tvSpoiler alert: Find out the result of a heated final show
Harvey Weinstein reveals his secret weapon on-set
Now that an oil trader's drinking has got him sacked, will we all have to make do with an afternoon latte?
Chiwetel Ejiofor and Idris Elba get nods for Best Actor, which no black Brit has ever won
Geoffrey Macnab reviews The Desolation of Smaug - the meat in Peter Jackson's Hobbit sandwich
peopleWhat advice would David Cameron give to his younger self?
Mystery of Epping Forest 'big cat' is solved
French café starts charging extra to rude customers
Scientist create 'robotic sperm' to help with fertilisation and drug delivery
Australia incest case: Severely deformed children found in remote farming community after generations of inbreeding
Fox News presenter tells viewers it is a 'fact' that both Jesus and Santa Claus are white
- 1 French café starts charging extra to rude customers
- 2 Sun will 'flip upside down' within weeks, says Nasa
- 3 Australia incest case: Severely deformed children found in remote farming community after generations of inbreeding
- 4 Physicists discover 'clearest evidence yet' that the Universe is a hologram
- 5 Fox News presenter tells viewers it is a 'fact' that both Jesus and Santa Claus are white
- < Previous
- Next >
iJobs Money & Business
£30000 - £45000 per annum + Bonus + Benefits: Harrington Starr: Regulatory Man...
£50000 - £75000 per annum + benefits + bonus: Harrington Starr: Pre-Sales / Cl...
£40000 - £60000 per annum + Bonus + Benefits: Harrington Starr: Regulatory Man...
£40000 per annum: Harrington Starr: Senior Network Engineer (CCNP, CCIE, Netwo...