Marks & Spencer (M&S), Britain’s biggest clothing retailer, said it was cautious about the outlook for consumers ahead of expected tax rises as it met forecasts with a 4.6 percent rise in annual profit.
The 126-year-old group, which also sells food and homewares, said yesterday it had made a satisfactory start to the first quarter of its new financial year.
“Consumers are naturally concerned about any impact of the Budget on 22 June,” it said, referring to plans by Britain’s new coalition government to announce steps to cut a record state deficit next month.
“We therefore remain cautious about the outlook for the year ahead,” the company said.
PROFIT
Marks & Spencer, which serves 21 million Britons a week from more than 650 stores and also has about 300 shops abroad, said it made profit before tax and one-off items of £632.5 million (US$910 million) in the 52 weeks ended on March 27.
That was just ahead of analysts’ average forecast of £628 million in a company poll, helped by a 30-basis-point increase in clothing market share to 11 percent.
But it falls short of the rises posted by rivals like Next and John Lewis, and underscores the challenges facing new chief executive Marc Bolland as he looks to rebuild profits toward the £1 billion achieved in 2007-2008.
ECONOMY
M&S executive chairman Stuart Rose, who is giving up his executive functions at the end of July, told BBC Radio he did not expect Britain’s economy would dip back into recession and said he was confident M&S could stay in growth.
Arden Partners analyst Nick Bubb, however, forecasts a small fall in profits to £620 million this year and next year because of competition in clothing and the need to focus on low prices in food.
“The shares may edge up first thing, but our view remains, notwithstanding Next’s pure UK exposure, that Next should trade at a small premium to M&S,” he said.
M&S’ sales rose 3.2 percent to **L9.3 billion and the firm cut its annual dividend to 15 pence a share from 17.8 pence the year before, in line with previous guidance.
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