M&S chief to report drop in half-year profit

Kasmira Jefford
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MARKS & Spencer’s chief executive Marc Bolland is expected to come under renewed pressure this week as the retailer admits to falling first half profits for the second time in two years.

Bolland, who has been at the helm of the FTSE 100 retailer for two years, is expected to announce interim pre-tax profits of around £280m on Tuesday, down by 11 per cent compared with last year’s half-year number of £315m.

Despite food sales rising 1.5 per cent, like-for-like sales in general merchandise, which includes its troubled womenswear division are forecast to be down 2.5 per cent in the second quarter.

City analysts will be cautiously awaiting news of trading at Marks & Spencer’s key womenswear division which suffered a 6.9 per cent slump in sales in the first quarter.

The group in July revealed its worst underlying quarterly sales performance since 2008, blaming bad weather and tough economic conditions.

The news coincided with a shake-up of the management team, with former Jaeger boss Belinda Earl drafted in as style director and John Dixon, promoted to head its clothing and home business. The changes however are not expected to make an impact until next year.

“We believe that the new management team in UK apparel should be given the room to demonstrate an improvement in performance, albeit we concede some nervousness in this respect, given the central importance of the category to the investment case,” Clive Black, analyst at Shore Capital said.

Bolland is 18 months into a five year plan to turn M&S into an international multi-channel retailer.

He is investing over £500m on overseas growth including four new foreign websites and has spent £150m on launching a new website.