High street giant Marks & Spencer's shares came under pressure from profit takers after its earnings failed to beat analysts' expectations.
But these were still good numbers - a 13 per cent rise in underlying pre-tax profit isn't to be scoffed at given the challenging market backdrop that the retail industry has faced over the last year. The group also continued to pick up market share in both food and clothing, and outlined plans to improve instore navigation and sub-branding. Beyond that, chief executive Marc Bolland made no bones about hammering his message home again - namely that the group is well on its way to becoming a multi-channel international retailer.
The recent appointments of former Tesco online chief, Laura Wade-Gery, to oversee the shift from the current Amazon platform, and Inditex's Jan Heere as head of international, should accelerate this process. But, as these results show, the group has already made significant progress on the overseas front. International revenues climbed 7.9 per cent on a constant currency basis to top £1bn for the first time, contributing £147m to operating profit. That's up 9.5 per cent, driven by franchised stores, which will remain the key driver of overseas expansion in key markets such as China and India. The group will also return to France in November.
But Mr Bolland said that success in the UK remains a prerequisite for international expansion. "You can only do that when you're best in class in your home country," and third key hire - finance director Alan Stewart - will be essential to ensuring that the group will continue to deliver against its efficiency programmes. M&S is already benefiting from lower levels of promotion and waste in food and, while general merchandising margins were affected by rising input costs, it would have been worse if it were not for the effect of improved sourcing.
Numis Securities expects underlying full-year pre-tax profit of £730m and flat EPS of 34.4p for 2012.
| ORD PRICE: | 392p | MARKET VALUE: | £6.21bn | |
| TOUCH: | 391-392p | 12-MONTH HIGH: | 431p | LOW: 322p |
| DIVIDEND YIELD: | 4.3% | PE RATIO: | 10 | |
| NET ASSET VALUE: | 169p | NET DEBT: | 71% | |
| Year to 2 Apr | Turnover (£bn) | Pre-tax profit (£bn) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2007 | 8.58 | 0.94 | 39.1 | 18.3 |
| 2008 | 9.02 | 1.13 | 49.2 | 22.5 |
| 2009 | 9.06 | 0.71 | 32.3 | 17.8 |
| 2010 | 9.54 | 0.70 | 33.5 | 15.0 |
| 2011 | 9.74 | 0.78 | 38.8 | 17.0 |
| % change | +2 | +11 | +16 | +13 |
Ex-div: 1 Jun Payment: 15 Jul *Includes intangible assets of £528m, or 33p a share | ||||
