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M&S is out of fashion

RESULTS: Marks and Spencer has delivered a rather underwhelming set of full-year results. We remain cautious on the outlook for this year.
May 21, 2014

Having spent the past three years, and a great deal of money, laying the foundations for growth, Marks & Spencer (MKS) will now focus on delivery. So pledged chief executive Marc Bolland as he unveiled a 4 per cent fall in the retailer's underlying pre-tax profit to £623m.

IC TIP: Sell at 446p

The strategy is to improve margins and profitability in the important general merchandise (GM) division, where underlying sales fell by 1.4 per cent in the year. Mr Bolland is targeting a 100 basis-point increase in the gross margin, to be delivered through improved sourcing. But that might not be enough to appease long-suffering investors. They were promised a 30 to 50 basis-point margin improvement this year, but were instead served up a 110 basis-point fall, as the high-street retailer came under pressure from promotional activity.

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