Marks and Spencer Group plc (LON:MKS) sees profits fall.
Marks and Spencer (LSE: MKS), the United Kingdom's clothing and home product retailer with 731 stores across the country, saw profits before tax fall 14% to £564.3m for the year to 30 March 2013.
Group sales were slightly up 1.3% to £10bn with international and multi-channel sales, up 4.5% and 16.6% respectively. The Group's owned businesses in India and China provided a solid performance during the year, with good like-for-like growth and the opening of new space. The more significant UK sales were up 0.9% to £8,951m, although like-for-like sales actually fell by 1%.
UK operating costs were up 1.8% on the previous year. Efforts have been made to make the supply chain more efficient to offset the effect of inflation and the need for new space and customer service in stores. Underlying profits before tax fell from £705.9m last year to £665.2m.
Underlying basic earnings per share also dropped to 29.2 pence, a 10% fall. The full-year dividend was held at 17 pence per share. In addition, the Group's net debt rose from £1.9bn to £2.6bn.
Marc Bolland, Chief Executive, said:
"In a challenging market, M&S sales grew by 1.3%. Three of the four parts of the business made strong progress...We are working hard to get the General Merchandise performance back on track. We have already made progress in our operational execution, and our new Autumn/Winter ranges have received a positive reaction. We are very pleased with Food performance which benefitted from our continued focus on delivering innovation, and unrivalled quality and provenance. Our International operations performed well in key markets and our Multi-channel business delivered strong growth."
Looking forward to FY2014, Marks and Spencer is aiming for an improvement in underlying profit but does expect to incur additional costs related to the new web platform. Operating costs are expected to increase by 3.5% due to inflation and the need for more space and capital expenditure is expected to be £775m. The Group is addressing a sustained period of under-investment and expect to inject £550m per year after FY2014.
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> Barry does not own shares in Marks and Spencer.