Marks & Spencer (LON:MKS) profits tumbled by almost two thirds in the year to April 1st, as its struggling clothing division continued to drag down performance.
Profits at the British retailer fell to £176.4 million for 2016 down 63.9 percent from £488.8 million, with company profits affected by new store openings and lack of demand for its clothing ranges.
Clothing and home sales revenue also fell by 3.4 percent, with a lesser decline across its food sales which fell just 2.1 percent in the fourth quarter.
Steve Rowe, the M&S chief executive, said: “I am pleased with our progress and we remain on track. As we have made improvements to our clothing and home product and proposition, our customers have noticed; we are starting to stabilise market share and importantly have seen full price market share growth, as we removed excessive discounting.”
Regarding future outlook Rowe remained optimistic, saying:
“The planned restructuring of M&S has come with a cost and has impacted profits, but the business is still strongly cash-generative and we reduced our net debt.”
He added: “Looking ahead, we will continue our programme of self-help in a tough trading environment. We remain committed to delivering for our customers and shareholders as we build sustainable foundations for the future.”
Earlier this month, M&S announced the appointment of former Asda boss Archie Norman as the company’s new chairman. Norman has been tasked with overhauling the businesses struggling clothing division and to continue to oversee expansion of its successful food-only concessions across the U.K.
This follows the announcement that the retailer is set to expand into food delivery services this autumn, as it looks to compete with its larger rivals such as Tesco (LON:TSCO) and Sainsbury’s (LON:SBRY).
Alongside reviving its struggling clothing sales, Marks & Spencer CEO Rowe has also been enacting a substantial cost-saving turnaround plan for the company. Last year Rowe announced plans to shut 30 UK stores and convert 45 more into food only stores as it looks to maximise profit margins and growth.
Shares are currently up 1.06 percent as of 10.12AM (GMT).