M&S bemoans difficult trading conditions in Irish market

Retailer announces 1 for 5 rights issue to fund Ocado deal at 30% discount to market

Photograph: Toby Melville/Reuters

Photograph: Toby Melville/Reuters

 

Retailer Marks & Spencer has reported difficult trading conditions in the Republic as the company said profits overall fell again last year.

The company also announced details of a £601.3 million rights issue to fund the joint venture with Ocado that was agreed in February. The funding will see all current shareholders offered the right to buy one share at 185 pence for every five shares they currently own. That represents a discount of roughly 30 per cent to the company’s most recent stock market session close. Details of the rights issue came shortly after the company reported a 10 per cent fall in full-year profit, a third straight decline, along with falls in quarterly underlying sales of both clothing and food, showing the pain of its latest attempt at a multi-year turnaround.

Despite the latest profit fall, M&S said on Wednesday that its “transformation plan” was on track and that the pace of change would accelerate in its new financial year.

As part of an increased focus on online sales, M&S said it had “replatformed” the website for its business in the Republic.

The group, one of the best known names in retail, made a pre-tax profit before one-off items of £523.2 million (€595.3 million) in the year to March 31st. That was slightly better than analysts’ average forecast of £519 million but down from £580.9 million made in 2017/18. A decade ago M&S made a profit of £1 billion.

Clothing and home like-for-like sales fell 1.3 per cent in M&S’s fourth quarter, while food sales were down 1.5 per cent on the same basis. The retailer said that this year’s later Easter impacted sales in clothing and home by an estimated 0.4 per cent and food by 1.9 per cent.

The group, which said in May last year it was targeting sustainable, profitable growth in three to five years, said at this stage it is judging itself as much by the pace of change as by the trading outcomes.

“While there are green shoots, we have not been consistent in our delivery in a number of areas of the business,” said chief executive Steve Rowe.

“M&S is changing faster than at any time in my career – substantial changes across the business to our processes, ranges and operations and this has constrained this year’s performance, particularly in clothing and home,” he said. – Reuters