High street bellwether Marks & Spencer narrowly beat City expectations on Tuesday by declaring a 13 per cent increase in profits in its last financial year.
The retailer also gave an update on its revamped store design, a result, it said, of customers saying they find the shops difficult to navigate.
Underlying profits before tax rose 12.9 per cent to £714m, with revenues up 4.2 per cent to £9.7bn.
“Our customers have told us they find our stores difficult to shop [in]. We are addressing this by segmenting our stores better, by creating a more inspiring in-store environment, and improving in-store navigation and packaging architecture,” M&S said.
Stores have been separated according to the kind of customers they attract, and will be stocked differently according to which segment they fall into.
“While the last store modernisation programme improved the core infrastructure of our stores, it has not delivered an inspirational shopping environment for our customers.
Moreover, 90 of our stores remain unmodernised. Our aim is to complete this programme over the next three years and work on delivering an improved in-store environment across general merchandise and food,” the statement said.
A new director of space, Neil Hyslop, is in charge of the revamp.
As part of a broader revamp, customers will also soon start to see clothes branded as “M&S Woman” and “M&S Man”, the retailer said. It is also drafting in European designer Marcel Wanders to introduce new home products.
Real estate decisions will be overseen by a new property board, M&S said, to approve capital expenditure in the UK and internationally.
Capital expenditure rose to £492m from £389m the year before, as investment in new stores increased from £50m to £151m.
Like-for-like revenues in the UK rose 2.9 per cent in the year to 2 April 2011, despite the sharp slowdown in fourth-quarter general merchandise sales.
“General merchandise gross margin was down as a result of increased markdowns, commodity price inflation and adverse currency pressures which more than offset the benefits of better sourcing,” the retailer said on Tuesday.
Freddie George, an analyst at broker Seymour Pierce, said the UK was the weakest aspect of the results: “In the breakdown of results, UK profits were a little light of forecasts at £678m, down 3.3 per cent against the previous year because of weaker gross margins in general merchandise,” he said.
UK profits fell 3.3 per cent when compared with the previous 53-week period. Compared with a 52-week analysis, they rose 5.3 per cent.
M&S said it expected trading to be difficult this year: “We have had a good start to the new financial year but we expect trading conditions in the year ahead to be challenging due to rising pressure on consumers’ disposable incomes and high commodity prices.”
UK operating costs were up 3.5 per cent over the year, as the retailer took on new stores and its rents were revised upwards.
The final dividend rose to 10.8p, a 13.7 per cent increase. M&S shares led the FTSE 100 fallers in early trading, dropping 1.5 per cent to 391p.
Source : Guardian