M&S H1 sales marginally rise, profit improves by 2.3 percent

REPORT_ Marks & Spencer (M&S) reported a marginal rise of over 1 percent to 4.9 billion pounds (7.7 billion dollars) with underlying profit before tax improving over 2.3 percent. General merchandise sales were down 2.3 percent withlike-for-like sales down 2.9 percent for the six months ended September 27, 2014.

Clothing sales were down 1.6 percent or 2.2 percent on a like-for-like basis. It has updated full year guidance with gross margin level raised from over 100bps to from over 150 and over 200bps. Operating costs are expected to be lower from over 4 percent down to over 3.5 percent.

Commenting on the results, Marc Bolland, Chief Executive, said, “M&S delivered sales growth and increased profit in the first half despite a tough market, particularly in September. We are pleased with the progress we have made against our key priorities for the year: GM gross margin, improving womenswear, driving food growth and cash generation.”

Womenswear sales were up 1.3 percent in the first five months of the year, with an improving trend up until the unseasonal weeks of September. M&S.com sales were down below 6.3 percent over the first half. The sales trend improved through the first half, from below 8.1 percent in the first quarter to below 4.6 percent in the second quarter.

Sales in its international business were up 1.2 percent on a constant currency basis (below 3.4 percent reported currency). Operating profit was 51.3 million pounds (81.5 million dollars), level on the year. Company opened 23 new stores and now trade from 470 stores across 56 territories. While trading in the Republic of Ireland continued to be difficult, in part due to last year’s store closures, many of its owned businesses delivered good sales and profit performance despite currency headwinds and unseasonal conditions across Europe.

Its franchise business has been impacted by currency and political issues in the Middle East region and lower shipments. UK gross margin was up 50bps at 41.8 percent driven by strong improvement in general merchandise. General merchandise gross margin was up 150bps at 53.7 percent.