First Drop In M&S Profits For Three Years

Marks & Spencer has revealed pre-tax profits have declined for the first time in three years to £706m for the 12 months to April.

Total sales climbed 2% to £9.9bn and although sales of food grew by 2.1% in UK stores open longer than a year, general merchandise fell by 1.8% driven by a sharp drop in homeware.

Chief executive Marc Bolland told Sky News: "The environment in the UK is challenging for us and in the coming year it will remain challenging.

"We're pleased with online growth of 18% and international growth of nearly 6%.

"We're set up to roll out 100 stores internationally this year and build new websites in 10 countries worldwide."

M&S reported a 2.5% rise in sales in 15 pilot stores which have been refurbished to improve customer navigation by creating new in-store subdivisions between its clothing brands.

The new format will be rolled out across its 700 UK stores.

It says a 10% fall in homeware sales was mostly due to its decision to stop selling technology products such as TVs.

But it reported a "a mixed performance" in its core womenswear range despite strong growth in lingerie, menswear and childrenswear.

Analysts have been disappointed by efforts to improve M&S womenswear range with criticism that it behind fashion trends and that customers are moving to rivals John Lewis, Next and Primark instead.

Mr Bolland said: "We have introduced more than 100,000 pieces in what we call 'fast fashion' so there are a lot more fashionable products in stores at the moment compared with three years ago.

"Every four weeks you can see newness coming through from the catwalk to the M&S Woman brands."

Like other retailers including Tesco and Sainsbury's, M&S said it would slow down the pace of its UK store expansion with an expected 3% increase in floorspace this year, slowing to 2.5% next year with the focus on opening new Simply Food stores.