Profits slump at M&S

BELEAGUERED High Street stores group Marks & Spencer has revealed a fresh slump in sales and profits, blaming 'tough economic andcompetitive conditions'. It says the outlook remains 'challenging'.

The full-year results will raise questions about chief executive Stuart Rose's ability to turn around a long decline at the retailer.

'We have made good progress, however, thereremains much to do,' the company said in a statement.

Group pre-tax profit was £618.5m, down 19% for the year to the end of March, down from £763.2m previously.

Sales figures revealed weak performances from the clothing and food departments. Total sales fell 2%, with non-food sales down 5.3% and food up 2.3%. However, total sales on a like-for-like basis, which strips out the impact of new and closed shop space, were down 5.1% - non-food down 7% and food down 2.8%.

The company blamed a weak performance in womenswear, although that was partly offeset by demand for its Per Una range. Lingerie was said to have suffered from having an 'over complex range' while menswear held up well. The market share for childrenswear stabilised for the first time in three years in the last quarter of the year.

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The company also blamed 'inconsistent price architecture' and said it was now benchmarking prices in its stores against key competitors.

Rose was not involved in putting together the poorly performing autumn 2004 clothing ranges but he played a major role in the spring/summer 2005 offerings.

'The group's financial performance for the year was disappointing,' said Rose. 'When I joined in May 2004, action was taken, where possible, to reduce the unacceptablyhigh levels of commitment in the business.

'Despite reducing stocks and commitment by some £l;1.3bn over the year, we had to take a high level of markdowns which severely impacted our operating profit. A new buying process andstock controls should enable us to deliver reduced markdowns in the coming year.'