Despite the humbler target, Tuesday UK’s biggest clothing retailer reported revenue of 10.3 billion pounds, short of estimates yet again.
Margins were also a reason for concern among investors and the retailer´s personnel as they dropped 1.1 percent, as opposed to the expected 0.5 percent growth.
Bolland remains positive despite the continuous drop in annual figures
“The key question is whether M&S can actually deliver on this guidance or whether pressure from competition and higher promotions will once again cause the company to fall short of its margin goals,” summed up Jamie Merriman from Sanford C. Bernstein in a note to investors.
On a similar note, Stephen Springham, Senior Retail Analyst, Planet Retail, highlighted that, “Ultimately, the business will always stand and fall on the performance of its core UK business, notably womenswear. The Q4 release trumpeted a return to sales growth for clothing (+0.6 percent), although GM sales as a whole declined 0.6 percent, implying a somewhat suspect double-digit decline in homewares sales. Investors will no doubt need far more convincing that the positive trend in clothing is not only sustainable, but can also be achieved without heavy promotional activity and discounting. Today’s profit and margin trends are unlikely to bring any such comfort.”
“Today’s full-year results mark the culmination of CEO Bolland’s three-year turnaround plan at M&S – yet pre-tax profits continue to decline. Senior management will no doubt make reference to the ‘heavy lifting’ carried out over the past three years and emphasise that, with capex levels tailing off, profit benefits will now be forthcoming. But how soon is now?” wondered Springham.
Marks & Spencer noted a 3.9 percent drop in full-year underlying pre-tax profit to 623 million pounds, dragged by declining like-for-like sales for general merchandise in the UK – including clothes and furnishings – which were down 1.4 percent in the year until March 29.
Total UK sales were up 2.3 percent in the year but general merchandise remained at 0 percent.Multi-channel sales, including online and mobile, were up 22.8 percent. On a positive note, clothing purchases raised marginally, helping the company reduce its net debt by 6 percent to 2.46 billion pounds.
Chief executive Marc Bolland said: "We are focused on improving our performance in general merchandise and were pleased to see early signs of improvement.” He reminded that "Three years ago, we recognised the scale of investment required to transform our business, investing to strengthen our foundations and improve our customer offer.”
All in all, Bolland showed content with the results, adding that "We are making solid progress on this journey and are now focused on delivery."