Marks and Spencer has reported a fall in profits for the third year in a row: in the year ended in March, the store saw a 3.9 per cent decrease in underlying pre-tax profit, to £623m.
That is, however, considerably better than the 7.5 per cent drop analysts have been predicting.
Pressured chief executive Marc Bolland says the store is making “solid progress”, with “early signs of improvement” showing through.
The high store stalwart saw group sales up 2.7 per cent, at £10.3bn, with UK sales up 2.3 per cent.
Shares have fallen 1.3 per cent this morning, as investors digest the results.
Food continued to perform well, with a 4.2 per cent increase in sales. General merchandise was flat over the year, although there were some signs of improvement in its clothing offering in the fourth quarter of the year, and those have continued, it said. For Bolland - and, no doubt, for shareholders - it's the area of focus. Things are "not yet satisfactory", the chief executive said.
Speaking on Radio 4 Today's programme this morning, he said M&S has a clear strategy and its step by step approach is working. "Heavy lifting" needed to be done over the last three years, he said, with investments necessary because they hadn't been made in the last 15 to 20 years, before he took the reins. The focus is now on the growth delivery that can be made by a company which he believes is now fit for purpose.
Part of that delivery is in getting the firm's online offering up-to-date. Indeed, performance will be affected by the launching of the new, revamped M&S.com site in the first quarter, which’ll take four to six months to “settle in”, M&S said.
The company’s been criticised for missed opportunities around its online activities, which are now seen as key when it comes to ramping up growth. According to Julie Palmer, managing partner at Begbies Traynor, who was speaking on Radio 5 Live this morning, 19m M&S customers have never used its online site.
Bolland said the work the store's done on its online offering is an important step in the right direction.
This morning, Victoria Buxton, analyst at Edison Investment Research, has commented that M&S' focus on e-commerce is logical, and means it now should be able to "compete more effectively" with rivals.
When it comes to its international offering, things are looking brighter, as the company presses on with expansion plans. International sales rose 6.2 per cent on a constant currency basis.
Last month, the store said it was picking up the pace of its global expansion, with plans to open 250 stores over the next few years, focusing on fast-growing areas like China and India and opening 20 food-only stores in Paris.
When it comes to outlook for the year, M&S is STILL upbeat, expecting general merchandise's gross margin to improve one percentage point on a more efficient supply chain. The second half of the year will be even stronger than the first, it says, as it continues to work on operational efficiency.
Operating costs are expected to go up four per cent, but capital expenditure will be lower, at around £500m to £550m. Bolland has been working tirelessly to slash expenditure in order to improve its clothing business.
The store will release its first quarter sales on 8 July.