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.

Start your day with The Independent, sign up for daily news emails
News
ebookA unique anthology of reporting and analysis of a crucial period of history
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

Guru Careers: Software Developer / C# Developer

£40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...

Neil Pavier: Management Accountant

£45,000 - £55,000: Neil Pavier: Are you looking for your next opportunity for ...

Sheridan Maine: Commercial Accountant

£45,000 - £55,000: Sheridan Maine: Are you a newly qualified ACA/ACCA/ACMA qua...

Laura Norton: Project Accountant

£50,000 - £60,000: Laura Norton: Are you looking for an opportunity within a w...

Day In a Page

Abuse - and the hell that came afterwards

Abuse - and the hell that follows

James Rhodes on the extraordinary legal battle to publish his memoir
Why we need a 'tranquility map' of England, according to campaigners

It's oh so quiet!

The case for a 'tranquility map' of England
'Timeless fashion': It may be a paradox, but the industry loves it

'Timeless fashion'

It may be a paradox, but the industry loves it
If the West needs a bridge to the 'moderates' inside Isis, maybe we could have done with Osama bin Laden staying alive after all

Could have done with Osama bin Laden staying alive?

Robert Fisk on the Fountainheads of World Evil in 2011 - and 2015
New exhibition celebrates the evolution of swimwear

Evolution of swimwear

From bathing dresses in the twenties to modern bikinis
Sun, sex and an anthropological study: One British academic's summer of hell in Magaluf

Sun, sex and an anthropological study

One academic’s summer of hell in Magaluf
From Shakespeare to Rising Damp... to Vicious

Frances de la Tour's 50-year triumph

'Rising Damp' brought De la Tour such recognition that she could be forgiven if she'd never been able to move on. But at 70, she continues to flourish - and to beguile
'That Whitsun, I was late getting away...'

Ian McMillan on the Whitsun Weddings

This weekend is Whitsun, and while the festival may no longer resonate, Larkin's best-loved poem, lives on - along with the train journey at the heart of it
Kathryn Williams explores the works and influences of Sylvia Plath in a new light

Songs from the bell jar

Kathryn Williams explores the works and influences of Sylvia Plath
How one man's day in high heels showed him that Cannes must change its 'no flats' policy

One man's day in high heels

...showed him that Cannes must change its 'flats' policy
Is a quiet crusade to reform executive pay bearing fruit?

Is a quiet crusade to reform executive pay bearing fruit?

Dominic Rossi of Fidelity says his pressure on business to control rewards is working. But why aren’t other fund managers helping?
The King David Hotel gives precious work to Palestinians - unless peace talks are on

King David Hotel: Palestinians not included

The King David is special to Jerusalem. Nick Kochan checked in and discovered it has some special arrangements, too
More people moving from Australia to New Zealand than in the other direction for first time in 24 years

End of the Aussie brain drain

More people moving from Australia to New Zealand than in the other direction for first time in 24 years
Meditation is touted as a cure for mental instability but can it actually be bad for you?

Can meditation be bad for you?

Researching a mass murder, Dr Miguel Farias discovered that, far from bringing inner peace, meditation can leave devotees in pieces
Eurovision 2015: Australians will be cheering on their first-ever entrant this Saturday

Australia's first-ever Eurovision entrant

Australia, a nation of kitsch-worshippers, has always loved the Eurovision Song Contest. Maggie Alderson says it'll fit in fine