Marks and Spencer today reported a 16% slide in annual profits from £781m to £658m, and as expected is downgrading its growth forecast over the next year. The high street retailer cited a tough trading environment for the drop in figures,
which saw UK like-for-like sales up just 0.3% on last year.
company said it would adjust its ambitious three-year sales targets set in November 2010 by cutting investment in UK stores by £200m. According to the BBC sales growth was planned to be between £1.5bn and £2.5bn by November 2013 but the target is now for growth of between £1.1bn and £1.7bn.
Marks and Spencer's chief executive, Marc Bolland, said doing business in the UK had got a lot harder since the target was set: "The UK trading environment has changed quite a bit in 18 months.It is not as great as it used to be when we expected higher GDP growth."
M&S currently has 730 stores in its UK portfolio from which it makes the majority of sales and profits. UK sales were £8.9bn, up by 1.5% on the previous year, with international sales of just over £1bn, 5.8% up on last year.
Bolland told the BBC there had been improvements in some areas but womenswear had suffered: "We've had a couple of departments that were highly successful, which was menswear. That was up, with suit sales 10% higher.
"In our lingerie department, hosiery was up 11%, kidswear was up more than 10% but womenswear has been more 'shopped around' the High Street and therefore had a bit of a softer result."
A month ago, Marks and Spencer admitted to running out of some of its best-selling lines of womenswear, which contributed to a drop in sales.
The business is expanding overseas with plans to open around 100 international stores a year. Underlying profits, which exclude one-off items, were also lower, but by just 1% to £706m.