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M&S profits slump
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May 22, 2001: 3:06 a.m. ET
UK retailer reports more gloom as it plans for long-awaited turnaround
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LONDON (CNN) - Marks & Spencer, the fallen star of the UK High Street, posted a 7 percent drop in full-year earnings on Tuesday as clothing sales slumped.
M&S said pretax profits before one-time items for the 12 months to March 31 declined to £480.9 ($692 million) from £517.2 million the previous year, in line with its own expectations.
In 1998, the company had turned a profit of £1.2 billion. But women customers have been deserting the company's clothing sales floors as competitors have squeezed M&S on quality, price and prestige labelling.
"Sales of adult clothing during the period were unacceptable and it is this that led us to take many of the tough but necessary actions required to build a platform for recovery," said Chief Executive Luc Vandevelde.
Turnover at M&S declined to £6.29 billion from £6.35 billion in fiscal 2000. Operating profit before one-time items dropped 13.5 percent to £334.8 million from £386.8, the company said.
The retailer, which on March 29 announced plans to slash 4,390 jobs as part of a drastic overhaul of its business, said it would take a £335.4 million charge to cover the cost of this restructuring.
The company's plans to close its loss-making continental Europe operations, including its stores in France, provoked a political outcry and street demonstrations.
Among other moves to turn the business around, M&S has put U.S. businesses Brooks Brothers and Kings Super Markets up for sale.
M&S also announced on Tuesday it plans to move its corporate headquarters to a different part of London to cut costs and "to encourage the creativity and innovation of our people."
M&S (MKS) also drew a line under its past when it announced three non-executive directors would retire, including David Sieff, the last member of the dynasty that guided M&S to the position of the UK's favourite clothing retailer.
The company's shares are a long way off their 1997 peak of 664.5 pence, but have recovered from last October's low of 170 pence. The shares rose 0.6 percent to 258.5 pence in early trade on Tuesday. 
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