Further profit slippage at Marks & Spencer

Marks and Spencer, the major UK food and clothing retailer, has suffered a further significant deterioration in current trading over the past five weeks, Mr Luc Vandevelde, chairman, said yesterday. But the group has decided against controversial store closures in a bid to avoid adverse publicity, he said.

Store closures are seen by analysts as the quickest way for M&S to address its sliding profits, by allowing it to focus on a smaller but more profitable customer base.

However, in many towns M&S stores are shoring up decaying centres, and its withdrawal could raise considerable public outcry.

Reporting to better-than-expected interim profits, Mr Vandevelde said a number of M&S stores were operating in "towns where the purchasing power is not there".

But simply closing them was not an option.

Mr Vandevelde said M&S would close six of its 287 stores, all so-called satellites which were acquired from Littlewoods two years ago.

Mr Vandevelde said the group was working on developing new retail concepts for the commercially unattractive town centres.

His comments came as the group reported pre-tax profits of £183.4 million sterling (€305.3 million) before exceptional charges, down from £192.8 million.

Sales were up from £3.69 billion to £3.76 billion for the 26 weeks to September 30th. The dividend was held at 3.7p, on adjusted earnings of 4.4p.

Analysts were divided over whether the disappointing current trading figure indicated a complete paralysis in M&S.