Marks & Spencer Group Plc, (MKS) the U.K.’s largest clothing retailer, reported first-half earnings that beat estimates and forecast an increase in profitability for the year as it offers fewer promotions. Gross margins will be towards the top end of a range from unchanged to a 0.25 percentage point increase, the London- based company said as it reported a 5.8 percent drop in underlying pretax profit and said clothing sales declined at a more moderate pace in the second quarter.
The retailer is being less promotional than last year and has increased supplies of popular advertised lines such as military coats. After falling 6.8 percent in the first quarter, same-store sales at the general-merchandise division eased 1.8 percent in the second three months, the retailer said. U.K. gross margin widened 0.3 percentage point.
Marks & Spencer shares rose as much as 2.4 percent in London trading and were up 1.8 percent at 395.1 pence at 9:34 a.m. The stock has gained 27 percent this year.Underlying pretax profit rose to 296.8 million pounds ($475 million) in the six months to Sept. 29, beating the 280 million- pound median estimate of 13 analysts surveyed by Bloomberg.
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The retailer ordered five times as much stock of advertised lines compared to last year, and sold three times more of those items in the first four weeks of the season, Bolland said. Marks & Spencer said sales growth at its food division accelerated to 1.6 percent in the second quarter from 0.6 percent in the first three months, outperforming the market.
