LONDON (Alliance News) - Marks & Spencer Group PLC on Wednesday reported a fall in revenue in the first half of its financial year, but said profit rose due the cost savings from its restructuring program.
M&S shares were trading down 3.5% at 292.00 pence, the worst performing stock in the FTSE 100 index.
For the six months to September 29, the UK food, clothing and homewares retailer reported a 7.1% increase in pretax profit to GBP126.7 million from GBP118.3 million a year ago.
Lower finance costs of GBP54.8 million from GBP59.1 million contributed to the profit increase.
The retailer also reduced operating costs by 2.1% to GBP1.68 billion from GBP1.72 billion mainly thanks to lower marketing spending and reduced store costs, due to closures.
However, revenue for the half-year dipped 3.1% to GBP4.97 billion from GBP5.13 billion, with sales falling across all M&S divisions.
In Clothing & Home revenue was down 2.7% to GBP1.70 billion, hurt by the store closures, with like-for-like sales down 1.1%.
Food revenue dipped 0.2% to GBP2.81 billion with like-for-like revenue down 2.9% "reflecting tough trading", M&S said.
By geography, core UK sales decreased 1.1%, coming in at GBP4.52 billion, and were down 2.2% on a like-for-like basis. International sales dropped 18% to GBP451.2 million.
Operating profit came in flat year-on-year at GBP165.7 million, after recording a GBP96.8 million hit from one-off items, of which GBP47.6 million related to the UK store-closure programme.
Back in May, M&S said it would close 100 stores by 2022 after Chairman Archie Norman declared that the group was "on a burning platform".
On Wednesday the retailer confirmed the plans to close 100 stores and said it continues to target "at least" GBP350 cost savings by 2021-2022 to "create a leaner, more efficient base for the business".
Chief Executive Officer Steve Rowe said: "In May I set out the challenges we face and the steps we are taking in this the first phase of our transformation programme. Against the background of profound structural change in our industry, we are leaving no stone unturned and reshaping our business, its organisation and culture.
"We are on track to restructure our store portfolio with over 100 full-line closures and expect to see newly remodelled stores open next year. We are fixing the basics of our online channel and there are very early signs of improvement. Every aspect of our ranges, how we trade, our supply chain and marketing is undergoing scrutiny and change."
The retail giant maintained its interim dividend at 6.8 pence per share.
With regards to Brexit, M&S said it continues to monitor the ongoing negotiations between the UK and the EU to "assess the potential impact and any transitional arrangements that may be agreed".
On Tuesday, Sky News reported that the boss of the M&S financial arm Sue Fox has resigned to run HSBC Holdings PLC's Channel Islands and Isle of Man operations.
Fox is expected to leave in January, according to Sky. M&S made no comment on the report in its earnings statement on Wednesday.
For the recent half year, M&S Bank posted income before adjusting items down to GBP18.7 million from GBP20.6 million a year ago, as a result of a "decline in the travel business and an increase in bad debt provisioning".
HSBC Holdings (HSBA)
Marks & Spencer (MKS)