Shares in Marks & Spencer (LSE: MKS) (NASDAQOTH: MAKSY.US) lifted in early trade this morning, despite a fall in non-food sales making headline news.
The group made its relaunch of Womenswear a key priority, with September seeing the launch of its autumn/winter ranges, but this wasn’t enough to halt the whole division’s decline in revenue.
That area has been underperforming for a while now, though, while its Food department is going from strength to strength, with today’s half-yearly report paying testament to that.
While General Merchandise saw like-for-like revenue decrease by 1.5% for the first half against the comparative period last year, Food contributed a 2.5% rise and, along with a strong performance from International (up 8% in the 26 weeks ending 28 September 2013), helped the company to a total increase in H1 revenue of 3.6%.
Marks & Spencer announced that underlying pre-tax profit slipped to £261.6m from £287.3m in H1 2012, causing underlying earnings per share dropping to 13.5p from 14.1p. Management have kept the interim dividend stable, at 6.2p, while remaining “cautious about the outlook for the remainder of the year”.
Chief executive Mark Bolland commented:
“We continued to invest in the long term transformation of the business. We are pleased with the progress made, given the high level of activity and a number of key projects launching this year. This has led to a higher level of additional costs, which while planned for, have impacted short-term results.”
“This year marks the final year of elevated capital investment in the business. From 2014/15 we will move to a lower, more sustainable long-term investment level of c.£550m. This, combined with the operational improvements we are making, makes us confident that we will deliver a material improvement in free cash flow from 2014/15, and we remain focused on delivering improved shareholder returns.”
