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LONDON (Alliance News) - Marks & Spencer Group PLC Wednesday reported growth in profit in its recently-ended financial year, although it was lower than the market consensus figures the retailer provided, as UK sales increased but international sales declined.
The clothing and food retailer reported a pretax profit for the year ended March 28 of GBP600.0 million, up 3.4% from the GBP580.4 million reported the year before.
According to consensus figures provided by M&S, analysts expected pretax profit for the year ending March 28 to be between GBP625 million and GBP664 million, giving a mid-point of GBP648 million.
Revenue remained flat at GBP10.3 billion, with UK sales increasing 0.7% and international sales declining 5.7%.
M&S has been struggling with its general merchandise business, which sells fashion and homewares, for a decade or more, and that business failed to meet expectations in the full year. However, general merchandise did demonstrate positive like-for-like growth in the final quarter, and gross margin improved by 190 basis points, benefiting from sourcing gains and slightly lower discounting, the retailer said.
General merchandise gross margin is expected to grow by 150 to 200 basis points in the current financial year, with modest sales growth, M&S added.
Meanwhile, the M&S food business saw sales up 3.4%, or 0.6% on a like-for-like basis, meaning food has delivered 22 consecutive quarters of like-for-like growth, M&S said.
"We are transforming M&S into a stronger, more agile business - putting the right infrastructure, capabilities and talent in place to drive our strategic priorities," Chief Executive Marc Bolland said in a statement.
International sales were hit by geopolitical issues, particularly in Russia, Ukraine and Turkey, the company said.
M&S will pay a total dividend of 18 pence, up 5.9% from the 17p paid the prior year.
"We are a more capable business following a sustained period of investment in our infrastructure and in our people. Our focus continues to be on delivery of the strategy and improvement in shareholder returns," Chairman Robert Swannell said in a statement.
"In the context of continuing increased free cash flow in the business we are also pleased to announce the start of an ongoing programme of enhanced returns for shareholders with a share buyback programme of GBP150 million in the current year," Swannell added.
By Karolina Kaminska; karolinakaminska@alliancenews.com @KarolinaAllNews
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