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H1 sales at Marks & Spencer hit by its latest reinvention
SALES at Marks & Spencer fell in the first half of its financial year, with demand for clothing and food hit by disruption from the latest attempt to reinvent Britain's most famous retailer.
After more than a decade of failed turnaround programmes, M&S is now targeting sustainable, profitable growth in three to five years by shutting less successful stores. It warned on Wednesday that sales were unlikely to improve soon.
"Trading conditions remain challenging and the headwinds from the growth of online competition and the march of the discounters remain strong in all our markets," it said.
Shares in M&S, which have fallen 4 per cent so far this year, were down 2.2 per cent at 0900 GMT.
M&S launched its latest turnaround plan last November, two months after retail veteran Archie Norman joined as chairman to work alongside chief executive Steve Rowe, a company lifer.
Like other established retailers, M&S is trying to deal with the shift of clothing sales online along with unrelenting price competition from supermarkets and discounters.
Pressure on consumer spending, a shift in expenditure towards experiences and away from clothing, as well as unhelpful weather trends have also hampered efforts to revive its business.
Results on Wednesday showed that its previously reliable food business was particularly weak, with like-for-like sales down 2.9 per cent - below expectations of a 2 per cent fall and reflecting the need for price cuts.
Gross margin in the division fell 25 basis points.
Sales in its clothing and home division - long the country's first port of call for school uniforms, interview suits and underwear - fell 1.1 per cent on a like-for-like basis while its gross margin was down 20 basis points.
"Against the background of profound structural change in our industry, we are leaving no stone unturned and reshaping our business, its organisation and culture," said Mr Rowe.
The group said its full-year outlook was broadly unchanged and it maintained its interim dividend as cost cuts helped underlying profit to rise by 2 per cent to £223.5 million (S$402.4 million) in the six months to Sept 29, ahead of analysts' average forecast of £203 million.
M&S is targeting 100 British store closures by 2022, as it strives to make at least a third of clothing and home sales online. It has said it could close even more as it manages its property estate more pro-actively. REUTERS