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Wednesday 18 September 2019

Marks & Spencer set for half-year profits dip

Like-for-like sales at the retailer’s troubled clothing and home division are expected to drop 1.2%.

MandS will unveil half-year figures on Wednesday (Yui Mok/PA)
MandS will unveil half-year figures on Wednesday (Yui Mok/PA)

By Ravender Sembhy, Press Association City Editor

Marks & Spencer is set to report another dip in profits this week as the retailer’s clothing and food divisions come under pressure amid a major restructuring.

The high street giant is tipped by City analysts to book a fall in underlying pre-tax profit of as much as 14% to £188 million for the first half of the year.

Consensus forecasts point to a pre-tax profit of £203 million versus £219.1 million in the same period last year.

Like-for-like sales at the retailer’s troubled clothing and home division are expected to drop 1.2%, while comparable food revenue is set to fall 2%.

Diminishing sales will reflect the impact of a painful five-year restructuring programme, which is being spearheaded by M&S chairman Archie Norman and chief executive Steve Rowe.

The duo have been seeking to save costs through store closures and shutting distribution centres as part of a wide-ranging efficiency drive as the company’s financial performance deteriorates.

Under the plan, M&S said in May it will shut more than 100 clothing and home outlets by 2022 as it accelerates the programme that will see thousands of jobs put at risk.

Around 29 stores have closed to date.

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Marks and Spencer chief executive Steve Rowe (Marks and Spencer/PA)

Graham Spooner, investment research analyst at The Share Centre, said: “Marks’ shares have largely traded sideways since full-year results in May.

“The company said it expected profit margins at its clothing and home business to improve this year so the market will be looking out for that in the latest update.”

In May, M&S saw full-year profits collapse as costs associated with the store closure plan weighed on the firm’s bottom line.

The retailer reported a 62.1% fall in pre-tax profit to £66.8 million in the year to March 31 as it was dragged down by £321.1 million in costs linked to closures.

Mr Spooner said investors will be looking out for any further costs at its half-year update.

“The May results were overshadowed by the news of a major restructuring which involves the closure of 100 stores so any news on progress with that, and the costs associated, will also be of interest to investors.”

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