* Full-year underlying pretax profit 665 mln stg, down 3.2
* Targeting profit improvement in 2013/14
* Forecasts "more material improvements" from 2014/15
* CEO says has investor backing, "timescales irrelevant"
* Shares up 4.9 pct
(Adds CEO, analyst comments, updates shares)
By James Davey
LONDON, May 21 British retailer Marks & Spencer
posted its lowest annual profit since 2009, hit by a
drop in clothing sales, and said growth this financial year
would be held back by investment in its online business and
The 129-year-old company, battling to reverse seven straight
quarters of falling underlying sales in clothing and homewares,
said it expects a stronger performance next year, when new
fashion ranges deliver results and capital spending falls.
At that point, it would look at improving returns for
shareholders, the company said on Tuesday.
Mark Bolland, chief executive since 2010, said the board and
investors supported the company's plan and he refused to be
drawn on whether he would consider his position if M&S's
fortunes do not improve within 12 months.
"Timeframes that you put out are irrelevant," he told
reporters, adding that investors are "voting with their feet" -
a reference to the company's share price rise.
M&S shares, up about 30 percent over the past year amid
periodic bouts of bid speculation, hit a five-year high last
week after the unveiling of its autumn/winter clothing range. By
1536 GMT on Tuesday, they were up 4.9 percent at 462 pence,
still well down on their 2007 highs of more than 750 pence.
"Lower capex (capital spending) guidance for 2013/14 onwards
... could mean improved dividends, share buybacks or even a
one-off payout," Panmure Gordon analyst Jean Roche said.
M&S aims to become an international multi-channel retailer,
connecting with customers through stores, the internet and
mobile devices. It is spending about 2.3 billion pounds ($3.5
billion) over three years on store revamps, logistics, IT and
systems, as well as selective investment overseas.
But it has struggled in a faltering British economy and lost
market share in its core womenswear business.
The profit fall, which was cushioned by a rise in sales at
its upmarket food business, is likely to affect Bolland's annual
bonus, though he declined to comment on this.
Bolland is pinning his hopes on a new clothing strategy
based on more stylish and higher-quality garments. Though the
autumn/winter ranges unveiled last week by his new general
merchandise team received generally positive reviews, some
analysts remain sceptical.
"There are clear execution risks in the plan in general
merchandise, no guarantee that international will improve this
year and we remain concerned that food is beginning to run short
of self-help," Credit Suisse analysts said.
Bookmaker Ladbrokes cut its odds on Bolland being out of a
job before the year's end, to 1:2 from 8:11.
M&S also said it had appointed Patrick Bousquet-Chavanne as
its new marketing director. Bousquet-Chavanne, currently
corporate director of strategy implementation and business
development, will succeed Steven Sharp in July.
Sharp has held the role since 2004 and will stay on as
creative director until February. "There's no conspiracy theory
here; this is genuinely in everybody's interest," he said.
M&S, which serves 21 million shoppers a week from more than
700 UK stores, made a profit before tax and one-off items of
665.2 million pounds in the year to March 30 on sales up 1.3
percent to 10 billion pounds.
The profit is down 3.2 percent on 2011/12 and compared with
a consensus forecast of 658 million pounds in a poll of analysts
published on the company's website.
The annual dividend was kept at 17 pence a share.
The group forecast an "underlying profit improvement" in the
2013/14 year but cautioned that it expects about 30 million
pounds of non-recurring dual-running costs as a result of the
transition to a new web platform and the opening of a
distribution centre in Castle Donington, central England.
M&S forecast that capital spending would be 775 million
pounds in 2013/14, down from previous guidance of 850 million
pounds, and about 550 million pounds in 2014/15, down from 600
($1 = 0.6570 British pounds)
(Editing by Mark Potter and David Goodman)