Marks & Spencer, the largest UK clothing retailer, plans to open home-furnishing stores to maintain ...
Marks & Spencer, the largest UK clothing retailer, plans to open home-furnishing stores to maintain sales growth after returning to profit in the second half of 2001.
The company will also add 20 food-only stores to the five opened last year, according to chief executive officer Luc Vandevelde. Net income in the six months ended 30 March rose to £8.8m from a £125.5m loss, the company said.
Vandevelde wants to broaden the range of goods and services to counter an expected decline in UK consumer spending as wage increases slow. Soaring house prices are encouraging UK consumers to borrow and upgrade their homes, according to analysts.
'It will become more difficult for Marks & Spencer from now on,'' said Nigel Ridge, a manager in Deutsche Asset Management's UK team. 'It has said costs are on the rise. The outlook is a bit mixed.''
The shares fell as much as 5.5p, or 1.3%, to 405p. They have risen 58% in a year.
'We need to start building a platform for future growth,'' Vandevelde said. 'Initiatives such as home and financial services should be driving earnings in two to three years time.''
Two home-furnishing stores will open in out-of-town locations during fiscal 2004, according to Roger Holmes, the company's head of UK retail.
'We have a relatively narrow offer but see potential to expand its breadth in what is a growing market with attractive characteristics,'' he added.
UK residents are taking advantage of the lowest interest rates in four decades to borrow increasing amounts against the value of their homes, according to Bank of England figures.
M&S is also spending about £35m introducing a combined loyalty and credit card to replace the existing charge card, Vandevelde said. The card will be tested among customers in Wales and Northeast England later this year.
In addition, the company expects to open a further 30 Simply Food stores on top of the 20 planned for this year, according to Holmes.
UK retail operating costs will increase by about 5% this year because of the sale and leaseback of smaller stores and the
Follows McVey's resignation
Schroders and Aviva Investors
LightTower Partners, Seneca Partners and Unicorn AM
Integration with Money Dashboard
View from the front row