Shop droop

20 May 2003

But the outlook for sales growth is dampening. M&S is going to have to power ahead with margin gains. The UK retailer has turned in a sturdy year. Operating profits grew by 21%.

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Marks and Spencer said the group operating profit rose 21% on a 6% rise in revenues. The British retailer said that clothing sales had increased by 10% in the year. The group said that it had increased market share by 0.7 percentage points to 11.7%. This despite continuing problems in the childrenwear department, where sales were down 10% on the year.

In the fourth quarter, the group had already reported that nonfood sales had contracted by 0.3%. M&S said that that was partly due to negative conditions in Greater London, where fourthquarter sales decreased by just under 3% on the year.

M&S said that it gained a further 1.3 percentage points on its clothing primary margin thanks to improvements in its worldwide sourcing and supply chain efficiencies. This is targeted to improve the clothing gross margin by 1 percentage point for each of the next three years.

The group also said that its food business – which accounts for 45% of sales outperformed the market with sales growth of 5.1% and that net margins were flat.

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