M&S sees profits drop by £9 million

Marks & Spencer has reported a drop in half-yearly profits, but turned in a performance much better than most analysts predicted.

Marks & Spencer has reported a drop in half-yearly profits, but turned in a performance much better than most analysts predicted.

Even so it is flagging up the prospect of a small number of store closures but says it will not name the stores in question until staff have been informed. However Norwich and Edinburgh are believed to be among the cities which could lose their stores. Loss-making stores acquired from Littlewoods last year may also go.

The group's pre-tax profits, stripping out one-off costs, for the 26 weeks to September 30, fell to £183.4 million, against £192.8 million for the same period last year.

Chairman and chief executive Luc Vandevelde said: "There are no quick fixes. We are here to rebuild the business to create solid long-term shareholder value."

SMarks & Spencer shares had slipped nearly 7% before the announcement as the City braced itself for another set of poor trading figures.

Analysts forecast a sharp fall in pre-tax profits, to come in between £150 million and £173 million, against £192 million at the same point last year.

Shares in the retailer today dropped 13p to 185p.

Clothing sales were expected to show a continuing decline, with like-for-like sales, stripping out the effect of new stores, down about 3% or 4%. Food sales, however, were expected to rise.

But the City is expected to give Mr Vandevelde, who has implemented a major programme of store refurbishments as well as bringing in new blood to the board, more time to prove his worth.