M&S hit with first profit decline in three years
MARKS & Spencer has scaled back its growth plans after being hit with its first profit decline in three years.
UK-based M&S is the biggest clothing retailer in its home market and has 21 stores across the Republic.
Yesterday, the London-listed company announced underlying pre-tax profits of £706m (€885m) for the year to the end of March. That is down from last year's £714m, and the first fall in three years, but it still beats analysts' expectations.
Shares in Marks & Spencer closed up 1.8pc in London yesterday at 344.30p each after the announcement.
Marks & Spencer does not provide separate accounts for Ireland.
Managers said profits had held up as a result of "ruthlessly" cutting costs, including reducing the amount of food wastage, but admitted facing an "increasingly challenging consumer backdrop".
Despite the latest declines, the company said sales would grow at least as much as analysts anticipated over the next two years.
Marks & Spencer said it would invest £200m less than planned expanding its UK store space over the next two years.
Chief executive officer Marc Bolland said he wanted to beef up the company's international and online presence to compensate for the declining revenues from traditional markets.
He said he expected revenues to grow by between £1.1bn and £1.7bn in the three years to the end of March 2014.
That's down from a previous forecast for growth of as much as £2.5bn.
Analysts had estimated sales of £10.8bn in fiscal 2014, according to the average of 21 analysts compiled by Bloomberg, compared with £9.7bn in 2011.
The cut in forecasts "is not as bad as feared", Caroline Gulliver, an analyst at Execution Noble in London, said. She has a buy recommendation on the stock.
A sign of how "challenging" the environment for the company has been was the 25pc discounts off knitwear at its 700 outlets over the peak Christmas selling period, to match competitors as shoppers balked at spending.
Marks & Spencer this month introduced the Simply M&S budget range of 800 items such as two pints of semi-skimmed milk for 89p.
Spending on international stores would increase by £50m over the three-year plan, the retailer said, with four new store leases signed in Paris. (Additional reporting, Bloomberg)