Marks & Spencer has reported a 5.3 per cent fall in profit for the six months to the end of September, and has said that its chief financial officer is stepping down.
The high street stalwart on Wednesday reported group revenue of £5.13bn for the period, up 2.6 per cent, but profit before adjusted items and tax slipped to £219m from £231m in the same period a year ago, largely as a result of the cost of pulling out of certain international markets, as well as payments associated with changes to pay and pensions.
“The business still has many structural issues to tackle as we embark on the next five years of our transformation, in the context of a very challenging retail and consumer environment,” said chief executive officer Steve Rowe.
He added, however, that the group had made “good progress” in “remedying the immediate and burning issues” that it had outlined last year.
He said that results across M&S’ clothing and home division had been particularly encouraging during the period and its international business, following recent adjustments, was now profitable too.
“We recognise now that we face stronger headwinds in food which will be addressed in the year ahead,” he said.
Analysts broadly praised the progress M&S had made, but remained cautious, especially as the group also announced that chief finance officer Helen Weir would be stepping down. Ms Weir will continue as CFO until a successor has been found and M&S said that it had already started to search for a replacement.
“After reporting a significant drop in profits back in May, CEO Steve Rowe’s turnaround plan seems to be gathering pace, with the closure of under-performing stores and reduced promotional activity in the group’s struggling clothing division starting to deliver results, albeit slowly,” said Julie Palmer, partner at consultancy Begbies Traynor.
"However the statement's increased caution surrounding the prospects of its usually high-performing food business, alongside the surprise resignation of CFO Helen Weir, will be troubling news to investors who previously saw food as the jewel in M&S's crown to crave stability from the company's leadership team following a spate of high profile departures recently,” she added.
Ms Palmer said that rising pressures on consumer spending, squeezed margins and increased competition from online rivals would pose particular challenges to the retailer in the months to come.
