Marks & Spencer cuts dividend as profits slide

High street stalwart Marks & Spencer said its earnings were 40 per cent lower in the year to March, compared to the year before. In today's announcement the retailer announced profits of £604.4m, versus £1bn last year and was cautious about the immediate outlook, after seeing sales drop in the first seven weeks of the year.

Unlike his rivals recently, executive chairman Stuart Rose refused to talk about 'green shoots', although he did think things may have hit a 'plateau', saying: "There's a push-pull going on at the moment between the consumer who is wanting to be more cheerful... (while) there are still some issues in the financial markets which could destabilise things."

The retailer was hit by competiton from cheaper rivals like Primark, Lidl and Aldi, who took market share from M&S and forced it into launching price promotions. As a result its gross profit margins will collapse another 125 points to 175 basis points this year.

The results will put more pressure on Rose, with shares in Marks & Spencer having fallen 18 per cent over the past year. He is already under fire from institutional investors for combining the roles of chairman and chief executive and the announcement of a 33 per cent cut in the dividend will disappoint big and small shareholders alike.

Private investors own over 20 per cent of the company's shares and they will be particularly hit by the reduction in payout from 22.5p to 15p. Shares in the company fell seven per cent this morning after the results.

WHAT THEY SAID:

Tempus in the Times: The lingering question is whether Sir Stuart is fiddling while M&S burns. Critics in the City, Tony Shiret at Credit Suisse most notably, urge drastic action. Today's "Doing the Right Thing" - a modest reshuffle of executive responsibilities aside - can be summarised as more of the same - but faster and more of it. The critics will be far from placated."

Neil Collins on Reuters: An unspoken theme runs through the statement; all this frenetic activity conceals the lurking suspicion that Stuart Rose, now chairman as well as chief executive, doesn't really know how to restore this company to its pre-eminent position in the hearts and purses of Britain's shoppers. At the same time there will be expansion in China, India and Europe. It's a lot to ask of the management of any business, let alone one which has lost ground and faces such formidable competitors."