Marks and Spencer half-year profits expected to drop

M&S is expected to report a double-digit drop in its half-year profits next week, according to predictions by City analysts.

The retailer is set to post a fall in underlying pre-tax profits by 14% to £188m. Its pre-tax profits for the first half of the year are set to be around £203m, down 7.8% from £219m in the previous year.

Like-for-like sales at the retailer’s clothing and home division are expected to drop 1.2%, while comparable food revenue is set to fall 2%. This drop in profits is said to be a result of the chain’s five year restructuring program, which includes the closure of around 100 stores by 2022 and cut £351m in costs by 2021.

Michael Hewson, an analyst at CMC Markets, said: “For all of the problems in the retail sector this year, the fact that M&S shares are only down a modest 7% is a little surprising given that it saw profits fall by 62% when it reported full year results in May this year.

“The M&S food offering still remains a bright spot, though even here it is getting squeezed as a result of the emergence of Aldi and Lidl, which has compressed margins in the food retail space.”