Marks & Spencer H1 Pre-tax Profit Rises; Says Market Conditions Challenging

Retailer Marks & Spencer Group Plc (MAKSY.PK, MAKSF.PK, MKS.L) reported Wednesday that its first-half profit before tax surged 51.5 percent to 153.5 million pounds from a restated 101.3 million pounds last year, reflecting lower net adjusting items in the period compared to the prior year. Basic earnings per share were 6.1 pence, up from 3.5 pence last year.

However, group profit before tax and adjusting items declined 17.1 percent to 176.5 million pounds from 213.0 million pounds in the year-ago period, due to lower gross profit in Clothing & Home, partially offset by lower UK operating costs. Basic adjusted earnings per share were 7.1 pence, compared to 9.4 pence last year.

Group revenue for the first half declined 2.1 percent to 4.86 billion pounds from restated 4.97 billion pounds a year ago. Group revenue decreased 2.2 percent at constant currency, largely reflecting lower like-for-like sales in Clothing & Home.

Clothing & Home like-for-like sales declined 5.5 percent, reflecting first half shape of buy and supply chain issues. However, Food like-for-like sales growth was 0.9 percent, driven by volume.

The company announced an interim dividend of 3.9 pence per ordinary share. This will be paid on 10 January 2020 to shareholders on the register of members as at close of business on 15 November 2019.

Looking ahead to fiscal 2019, Marks & Spencer noted that while some improvement in trading is planned in the second half, market conditions remain challenging.

In Clothing & Home, the company forecasts net store closures will reduce sales by about 2 percent, compared to about 3 percent previously, due to the timing of closures.

In Food, the company now expects the sales contribution from space to be broadly level with last year. Previously, the company expected a reduction of about 1 percent.

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