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Clothing retailer M&S performs well in challenging time

18
Apr '12
Marks and Spencer plc presents its fourth quarter results for 2011/12.

Marc Bolland, Chief Executive said:

“Direct had another strong quarter with sales up 22.8% through a number of new initiatives delivering an improved customer shopping experience.

“Strategic international markets, including India and China, delivered double digit growth but we continue to experience macro-economic pressure and restructuring in some parts of Europe.

“We have continued to manage costs tightly, and are confident of delivering full year profits in line with expectations. While the short term trading outlook continues to be challenging, we are focused on investing in line with our plan and are making strong progress against our goal of becoming an international, multi-channel retailer.”

In Clothing, menswear, lingerie and kidswear performed strongly. In womenswear our performance was mixed, with some key areas trading well. However, we performed less well in other areas where we were short of stock in a number of best-selling lines. We are taking steps to address this by strengthening our merchandising capabilities. We managed stock very tightly, resulting in less stock going into our mid-season sale. We have had a good start to our new Spring/Summer launch, with our new ad campaign appealing to a broad customer base.

In Home we were pleased with the performance of our key home departments of kitchens, bedrooms and bathrooms. Sales were almost entirely impacted by our decision to withdraw from technology.

M&S Direct delivered a strong performance with sales up 22.8%, ahead of the market. We launched a number of new initiatives aimed at improving our customers' shopping experience, including M&S Outlet on-line store which has been very popular with our customers.

Our strategic International markets in India, China and the Gulf continued to trade strongly and our newly opened flagship store in Paris performed ahead of expectations. However, International sales performance was impacted by continued macro-economic weakness in the Republic of Ireland and Greece, and the announced restructuring of our Central European business.

The pilot stores in the UK are performing well and customers have responded favourably to the improvements. Having thoroughly tested the new concepts, and by focusing on strong management of capital investment, we now plan to roll it out to the remainder of our estate, with no reduction in scope, for £100m less than the previous guidance of £600m. Our target completion date for the roll-out by mid 2013 remains unchanged.

Guidance for financial year 2012/13:

- Gross margin is expected to be 0 to 25bps up.
- Operating costs are expected to increase 3 to 5% as a result of increased space growth, depreciation, inflation and growth initiatives, offset by underlying savings.
- The planned opening of new footage will add c. 3% to UK and c. 20%to International space.
- Group capital expenditure is expected to be around £825m reflecting efficiencies identified in the UK store update programme.

Marks and Spencer plc


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