- Prachi Singh |
Marks and Spencer (M&S) reported improved Group half year results with sales up 1.4 percent to 5 billion pounds (7.7 billion dollars) and underlying profit before tax up 6.1 percent to 284 million pounds (438 million dollars). Underlying earnings per share increased 4.9 percent.
Commenting on the half year performance, Marc Bolland, Chief Executive, said, “We delivered good underlying profit growth in the first half and made strong progress against our key priorities. Our Food business again outperformed the market by over 3 percent points as our focus on quality and innovation continues to set us apart. In General Merchandise we decided to improve profitability by focusing on gross margin, delivering another significant increase, which in part resulted in slightly lower sales. As a consequence of good performance and strong cash generation we have decided to increase our dividend.”
Challenging trading impacts general merchandise sales
General Merchandise sales were down 0.4 percent with like-for-like sales down 1.2 percent. The company said that it focused on improving profitability and delivered a strong growth in gross margin, ahead of expectations but trading conditions were challenging with the UK retail sector impacted by unseasonal conditions resulting in high levels of promotional activity, particularly in the first quarter. And in the second quarter, decision to focus on full price sales and discount less affected sales performance.
M&S.com sales were up 34.2 percent. The company launched a new mobile website during the period driving an 83 percent increase in sales. International business was down 0.9 percent on a constant currency basis and down 5.1 percent on reported currency. Performance in its owned business was mixed as sales in Asian priority markets continued to grow, but Euro currency pressures impacted profitability. India delivered double digit like-for-like sales and in Greater China revenue was up despite the economic uncertainty across the region.
The company said that macro-economic and geopolitical factors continued to impact performance in its franchise business particularly in Russia, Ukraine and Turkey as well as the Gulf. UK gross margin was up 85bps at 42.6 percent as a result of strong improvement in General Merchandise. General Merchandise gross margin was up 285bps at 56.6 percent mainly driven by the improvement in buying margin.
Declares 6.3 percent rise in dividend
The company raised the interim dividend by 6.3 percent to 6.8p per share. At its last year end results, the company announced the start of an ongoing programme of returns to shareholders. During the year, it expects to return 150 million pounds (231.2 million dollars) of cash to shareholders in the form of a share buyback programme, of which 39.8 million pounds (61.3 million dollars) has been returned in the period and 59.5 million pounds (91.7 million dollars) as at October 30, 2015.