British retail giant Marks and Spencer (LON:MKS) has reported a rise in revenue, despite underlying profit falling in the first half of the year.
Revenue rose by 2.6% to £5.1 billion for the first 26 weeks of this year as profit before tax and adjusted items, their measure of core business performance, slumped by 5.3% to £219 million.
The company’s increase in revenue was driven by both strong sales in the UK and in their international business, rising 2.7% and 2.3% respectively. Revenue from food in the UK saw a significant spike of 4.4% as clothing and home sales stagnated.
A deeper look at the numbers, however, suggests that the first half of the year was more trying, in terms of revenue, than it appears. The main cause of the rise in food sales was due to opening 24 simply food stores across the country, but like-for-like sales fell 0.1%. Like-for-like revenue for clothing and home also dropped off by 0.7%.
Marks and Spencer’s operating costs also rose sharply, up 4.2% from last year. Higher costs were driven largely by an increase in store staffing, as well as central and distribution and warehousing costs rising. Marketing costs saw a significant decline compared to the previous year.
Steve Rowe, chief executive of the group, said “We have made good progress in remedying the immediate and burning issues at M&S I outlined last year. In Clothing & Home early results are encouraging and in International we now have a profitable and robust business”.
The former head of clothing for the retailer also acknowledged that they “face stronger headwinds in Food which will be addressed in the year ahead” and that “the business still has many structural issues to tackle as we embark on the next five years of our transformation, in the context of a very challenging retail and consumer environment”.
Marks and Spencer’s adjusted basic earnings per share declined 7.0% to 10.7p. It was also announced that Helen Weir, chief finance officer since 2015, would be leaving the company. She will remain CFO until a successor is found.
Share price for Marks and Spencer has been erratic in the day’s trading, falling 0.1% to 328p at the time of writing.