Marks and Spencer profits drop for third year, clothing slips

British retailer Marks and Spencer reported that underlying profits slid in 2013/2014 for the third year, hit by falling sales of clothing, in results on Tuesday. Profits before taxation sank 3.9 percent to £623 million ($1.05 billion, 765 million euros) in the year to March 29, compared with £648 million, MandS said. In reaction, shares in the company fell two percent in afternoon deals on the London stock market. The group added however that net profits rose 16 percent to £524.8 million, as total sales swelled 2.7 percent to £10.3 billion. “We are focused on improving our performance in general merchandise and were pleased to see early signs of improvement," said chief executive Marc Bolland in the earnings release. "Our food business had a very strong year, consistently outperforming the market." On a like-for-like basis, which strips out the impact of new floor space, British sales grew 0.2 percent with general merchandise down 1.4 percent but food up 1.7 percent. Bolland, who has been chief executive since May 2010, has overseen an investment programme that ploughed hundreds of millions of pounds into refreshing the business. "Three years ago, we recognised the scale of investment required to transform our business, investing to strengthen our foundations and improve our customer offer," he said. "We are making solid progress on this journey and are now focused on delivery." However, the retail company acknowledged that general merchandise profit margins had suffered from promotions and price discounts. "We faced a challenging clothing market, with unseasonal conditions and high levels of promotional activity," MandS added. The company's share price sank 1.96 percent to 422.145 pence in early afternoon deals, with some analysts unconvinced over the group's turnaround plans. "Today’s announcement that the company had reported a fall in profits for the third year in a row ... has once again prompted shareholders to ask questions about the pace of the latest turnaround strategy," said CMC Markets analyst Michael Hewson. He added: "Shareholders continue to ask themselves when they can look forward to the fruition of this task as the CEO grapples with an ever competitive retail environment, and the general merchandise division continues to struggle." The British capital's FTSE 100 index, on which the company is listed, was down 0.50 percent at 6,814.34 points, partly because of the MandS results.