M&S warns consumer squeeze will hit profit growth

Retailer Marks & Spencer has warned that financial distress on UK consumers will hurt its profit growth this year.

One of the UK’s best-known retailers said that although trading has been encouraging since early April, he expects financial pressures on customers to deepen over the rest of the year.

“We expect the decline in real revenues to sharpen in the second half and last at least for the rest of the fiscal year,” the FTSE 250 retailer said in its full-year results statement on Wednesday.

The slowdown is already evident at Ocado Retail, the online grocery store owned by M&S in partnership with Ocado. Sales growth in the venture will be in the “middle of the year” this year, down from the 10% it noted in the past, as energy costs go up in price.

Mrs Said it expects a “minimal” contribution from Ocado Retail to profits in its current fiscal year, which runs until April 2023.

The lower-than-expected profits from OkadoThe lack of £ 102 million from Russian sales and the lack of easing of business rates in the UK means M&S has started the current fiscal year with a “lower adjusted profit base”.

“Given the rising cost pressures and consumer uncertainty, we do not currently expect to move from this low profit base in 2022/23,” the retailer warned.

M&S shares were volatile in early London trading, while Okado shares were down 4%.

M & S’s cautious forecast came after CEO Steve Rowe, who Will be fired later in his month After six years, he progressed in reviving the group’s capital.

Better performance from the revamped food business and improved clothing and homewear sales have allowed the retailer to do so Double upgrade his predictions During its last fiscal year.

In the 12 months to April 2, M&S reported a pre-tax profit, excluding any items, of £ 523 million, in line with analysts’ forecasts and an increase of £ 50 million in the previous fiscal year. Revenue was £ 10.8 billion, up 7% from last year.

The group said net debt also fell from £ 1.1 billion last year to £ 420 million, not including lease commitments. As expected, M&S did not pay a dividend.

Rowe is set to hand over the role of CEO to Stuart Machine, the current head of the food department.

Peel Hunt analysts said the slower sales at Okado Retail were “disappointing”, highlighting how the business was hurt by The cost of living crisis facing consumers.

M&S last year posted a £ 13.9m profit from Ocado Retail, itself a sharp drop from £ 78.4m the previous year, when Ocado enjoyed a large move to an online grocery store during the epidemic.

M&S warns consumer squeeze will hit profit growth Source link M&S warns consumer squeeze will hit profit growth

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