M&S cuts dividend as profits slump
Marks & Spencer's pre-tax profits in the past year fell by 40% to around £600m as like-for-like sales slid by 5.9%.
Marks & Spencer is celebrating its 125th birthday this year, marking "a very long life for a retailer", said Rachel Sanderson on Breakingviews. Celebrations, however, "should be muted". Nearly every figure "is pointing in the wrong direction", said Elizabeth Rigby in the FT. Pre-tax profits in the past year fell by 40% to around £600m as like-for-like sales slid by 5.9%.
Price cuts have dented margins, but not enough to "stop the rot": the group's share of the womenswear, menswear and food markets has fallen. Margins are in for another pounding next year as sterling's fall against the dollar feeds through to costs. The tough outlook has prompted M&S to cut the dividend for the first time since 2000. That may well be "common sense", as chief executive Stuart Rose said, but shareholders are entitled to feel "uncommonly annoyed", said Nils Pratley in The Guardian. M&S has spent over half a billion pounds on buying back shares over the past two years at an average share price around a third higher than it is now.
Marks & Spencer: the core problem
Rose doesn't seem to have found a solution to M&S's "central structural problem", said Sanderson: the uncomfortable mix of "premium-priced food and mid-to-downmarket clothes". While the food business has come under pressure in the downturn, there are now plenty of high-street rivals offering the "high-quality but mass-market attire" that made M&S's name, as Jeremy Warner pointed out in The Independent. It's still not clear how M&S is relevant "to the modern world".
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
MKS: 300p; 12m change -25%
Get the latest financial news, insights and expert analysis from our award-winning MoneyWeek team, to help you understand what really matters when it comes to your finances.
MoneyWeek is written by a team of experienced and award-winning journalists, plus expert columnists. As well as daily digital news and features, MoneyWeek also publishes a weekly magazine, covering investing and personal finance. From share tips, pensions, gold to practical investment tips - we provide a round-up to help you make money and keep it.
-
What is a trust – and should you use it to avoid inheritance tax?
Trusts are surging in popularity as a way to avoid inheritance tax, according to financial advisers on the frontline of estate planning. We look at what trusts are and if they are right for you.
-
What will be the consequences of Donald Trump’s "One Big Beautiful Bill"?
The US president’s "One Big Beautiful Bill", an extraordinary mix of tax cuts and spending plans, has made it through both houses of the US Congress. What will be the consequences?