Retail chain Marks & Spencer plc saw its shares plunge yesterday after warning that profits this year would be down by almost a half following a poor Christmas.
Marks & Spencer (M&S) said pre-tax profits before exceptionals for the full year were now expected to be in the range of £625 million to £675 million sterling (#884955 million) almost half last year's profit of £1.17 billion.
A spokeswoman for Marks and Spencer Ireland said its operations were extremely profitable and the latest profit warning in Britain had no impact on operations here.
The company would continue to examine opportunities for expansion, she added, insisting that a new business structure for the group, unveiled yesterday by newly-appointed chief executive Mr Peter Salsbury, would benefit the Irish outlets.
Analysts in Britain, even after most recent downgrades, had pencilled in full-year profit figures of £780 million, with some still expecting up to £850 million before yesterday's bombshell.
M&S shares fell 47 1/2p sterling to 346p, a drop of more than 12 per cent which wiped more than a billion pounds off the company's market capitalisation.
The warning had a knock-on effect on other retailers including chemist chain Boots, which saw its shares slide 5 per cent despite its own reasonably solid statement.
In an initial move to stop the rot, Mr Salsbury unveiled the new business structure, creating three separate units comprising UK Retail, Overseas Retail and Financial Services.
He said M&S would stick to its traditional values, but would have to break with tradition in terms of how its business was run.
"Our brand has enormous inherent strengths and our task will be to draw on these to create the next stage of our development. In short, our approach will be to change our traditional ways of working but to keep our traditional values," Mr Salsbury said.
Retail analysts said the M&S performance had defied even their worst fears.
"The sales performance is absolutely appalling," said Seymour Pierce retail analyst Mr Richard Ratner. "To have 9 per cent extra [selling] space and have an overall sales decline of 4.4 per cent is horrendous," he added.
Most of Britain's retailers have had a tough time over Christmas as consumers, worried over the economic outlook, kept a careful watch on their spending. But M&S, traditionally viewed as offering quality at a reasonable price, would normally have been expected to ride out the storms better than most.
The firm had earned a special place in the British psyche, supplying British consumers with everything from underwear to sandwiches. Its distinctive green logo was becoming known across Europe and Asia, as it expanded overseas.
But the company now admits mistakes have been made with its merchandise and that it had lost touch with customers.
A spokesman blamed the profit shortfall on over-buying of goods for last autumn. He said M&S had started the year with sales increases of some 10 per cent and had expected this pace of growth to continue.
The shock warning follows a highly public boardroom power struggle late last year which ended with M&S insider Mr Salsbury taking the role of chief executive, with chairman Sir Richard Greenbury moving to the post of non-executive chairman.
