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LONDON (Alliance News) - FTSE 100-listed Marks & Spencer PLC said on Wednesday that profit slumped in its recently ended financial year, as it works to rectify "a number of structural issues" at the company.
Revenue rose 0.7% to GBP10.70 billion for the year to March 31, up from GBP10.62 billion last year, but pretax profit dropped 62% to GBP66.8 million from GBP176.4 million.
One-off costs came in at GBP514.1 million for the year, up from GBP437.4 million last year. This includes GBP321.1 million related to the UK store estate, up from GBP51.6 million the year before - as it accelerated its "transformation plans" - with a GBP15.5 million cost related to its IT restructure.
Adjusted pretax profit still fell 5.4% to GBP580.9 million, hit by a decrease in its Food gross margin, which fell "more than expected" by 140 basis points during the year.
Food revenue grew 3.9% - though like-for-like revenue slipped just 0.3% - while Clothing & Home revenue fell 1.4% and was down 1.9% on a like-for-like basis. Clothing & Home gross margin was up 50 basis points year-on-year, in line with expectations, and full-price sales steady.
UK costs were up 1.8% in the period due to costs relating to new space, inflation and channel shift. This was partially offset by efficiencies and lower incentive costs.
"There are a number of structural issues to address and we are taking steps towards fixing these. The new organisation will largely be in place by July and the team is now tackling transforming our culture to make M&S a faster, lower cost, more commercial, more digital business," said Chief Executive Steve Rowe.
The food, clothing and homewares retailer maintained its full-year dividend at 18.7 pence.
M&S said that although online sales are growing, its online capability is "behind the best of our competitors and our website is too slow".
Under a section of its statement titled "Facing Facts", the retailer continued: "Our fulfilment centre at Castle Donington has struggled to cope with peak demand and some of our systems are dated. In both businesses we need to revitalise our ranges and reassert our reputation for value for money."
Looking ahead for its recently-commenced year, M&S said it expects Clothing & Home gross margin to be flat to up to 50 basis points higher, "with the first half of the year adversely affected by currency and sale timing". Food gross margin is expected to decrease by as much as 50 basis points.
UK costs are set to decrease by up to 1%, while capital expenditure is expected to total between GBP350 million to GBP400 million.
