Good first half for Marks & Spencer
half sales growth of 4.3 per cent, helped by a 6.9 per cent gain in
the UK food retail business during the period. Food will continue
to play an important role in the second half as more Simply Food
outlets are opened.
First half sales at UK retail group Marks & Spencer were 4.3 per cent ahead of the previous year at £3.3 billion, helped by gains in the food, personal finance and household goods operations. Total group turnover (including international retail operations and financial services) was ahead 3 per cent to £3.8 billion.
The improvement in sales also helped lift operating profits by 8.6 per cent to £335.4 million, while pre-tax profit was ahead 7.4 per cent at £311.5 million. After exceptional charges of £3.7 million related to the relocation of the company's headquarters, operating profits were 8.5 per cent higher at £331.7 million while the pre-tax figure was 14.3 per cent higher at £326 million.
The group's UK food retail business showed sales growth of 6.9 per cent to £1.6 billion, ahead of the market as a whole, despite a slowdown in the second quarter as a result of lower levels of promotional activity and the hot weather. The new Simply Food concept continued its rapid rollout, with 19 new stores opened during the half, taking the total to 37. A further 34 are due to open by the end of the financial year.
Excluding the impact of these new stores, UK food sales were up 3.4 per cent on a like-for-like basis.
M&S has gradually withdrawn from most of its international businesses, but it does still operate a number M&S branded outlets (mainly in the Republic of Ireland and Hong Kong) and the Kings Supermarkets business in the US. The foreign M&S operations posted sales of £194.3 million for the half, up 6.5 per cent, helped by positive exchange rate developments.
Operating profit for the Marks & Spencer branded businesses increased by 22.4 per cent to £18.0 million. The stores in Ireland performed ahead of last year, and the performance of the first Simply Food store in Ireland was encouraging, the company said. However, the franchise business and stores in Hong Kong suffered in the first quarter from the effects of SARS and the war in Iraq.
The Kings business saw an 11.5 per cent fall in sales to £132 million during the half, partially due to the weak dollar but also to local competition and uncertainty surrounding the sale of the business, negotiations which were terminated in August. Operating profits for the first half were adversely impacted by a further charge of £1.5 million in connection with two stores closed at the beginning of this financial year.
