6 November 2012 Last updated at 03:30 ET
Marks and Spencer, the UK’s biggest clothing retailer, has posted pre-tax profits of £290m for the six months to the end of September, down 9.7% from the same period last year.
Group sales were up 0.9% to £4.7bn, with much of the growth coming from the food side of the business.
Food sales were up 3.4%, or 1.1% on a like-for-like basis, which strips out the effect of new stores.
Clothing and homeware like-for-like sales, were down 4.3%, M&S said.
Chief executive Marc Bolland said: “We are pleased to report a better performance across the business in the second quarter.
“We took steps to address the short term merchandising issues in General Merchandise [clothing and homeware] and as a result, we delivered an improved performance.
“Food outperformed the market on a like-for-like basis,” he said.
M&S said that the market had been challenging due to the bad weather, weak consumer confidence and pressure on customers’ disposable incomes.
And the summer’s major events had little or no effect on sales, M&S said.
“While the Jubilee and the Olympics improved the nation’s mood, they did not translate into higher sales.”
International sales were up 3.6% on a constant currency basis, with strong growth in China and India.
“The latest results from M&S are something of a mixed bag”, said Neil Saunders, managing director of retail consultancy, Conlumino.
“While the overall half year numbers look anaemic, there has been a material uplift in fortunes since the first quarter with even general merchandise moving into positive growth territory on a overall basis.”
While the group had benefited from improved High Street trading conditions and revamped stores, Mr Saunders warned that “it remains too early to call whether M&S is back on the path to sustainable growth.”
It remains too early to call whether M&S is back on the path to sustainable growth”
End Quote Neil Saunders Retail analyst, Conlumino
M&S’s clothing performance contrasted sharply with that of discount fashion chain Primark, which saw like-for-like sales rise 3% and revenues rise 15% for the year to 15 September.
Management shake-up
On Monday, Mr Bolland announced further management changes, with Frances Russell, a former director of Philip Green’s Arcadia, moving up to director of womenswear, replacing Annette Browne, who has left the company.
Janie Schaffer, currently chief creative officer at Victoria’s Secret, will succeed Frances Russell as director of lingerie and beauty early next year.
The latest shake-up follows the appointment of John Dixon in October, who moved from food to become the head of general merchandise, replacing Kate Bostock.
In May, M&S reported its first fall in annual profits for three years, with pre-tax profits for the year to the end of March down 16% to £658m.
BBC News – Business
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