M&S says clothing sales improving after profit dip

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High street stalwart Marks & Spencer today revealed a continued fall in clothing sales but insisted there are ‘early signs of improvement’ following the launch of its autumn and winter womenswear collection.

However, the group said it remained cautious about its prospects for the remainder of the year as it reported a 9 per cent fall in first-half profits, in line with analysts’ forecasts.

For the six months to 28 September, M&S posted an underlying pre-tax profit of £261.6 million, down from £287.3m a year earlier, as a squeeze on margins offset a 4.3 per cent rise in group sales to £4.9 billion.

Sales of general merchandise – which spans clothing and homewares – fell by 1.3 per cent in the second quarter. That was the ninth consecutive quarterly decline but marked an improvement on the 1.6 per cent slide seen in the first three months of the year.

Chief executive Marc Bolland said: “Although only in store for three weeks of the half year, our autumn/winter collection has been well received by customers, and we have seen some early signs of improvement.”

He added: “While consumer confidence appears to be improving, there is little evidence as yet of this translating to increased spending in the retail sector.

“Given continued pressure on disposable incomes, we remain cautious about the outlook for the remainder of the year.”

The interim dividend, to be paid on 10 January, was held steady at 6.2p a share.

Retail analyst Nick Bubb said: “The underlying picture is one of flattish sales, rising operating costs and gross margin pressure – trends that obviously need to change for the better in the second half if M&S wants to meet full-year profit expectations.”