Marks & Spencer sees profit dive

Marks and Spencer will be under pressure to deliver more for less

Marks & Spencer has pledged to keep cutting costs while improving operational efficiency and its IT set-up as it bids to stave off the impact of recession - which has already resulted in a 43 per cent drop in profits for the first half of the year.

The retailer today reported net profit during the six months to 27 September fell to £223m from £393m a year earlier. Revenue over that period reached £4.2bn.

One of the key priorities for the upcoming year is to “optimise margins and tightly control costs”, chief executive Stuart Rose said in a statement.

In an exclusive interview with Computing last week, M&S’ IT and logistics director Darrell Stein said that transformation both in technology and logistics is underway and further change will be introduce to address the “disconnect between IT and the business” at the retailer, caused by a period of under-investment in equipment and systems.

So far, operational IT costs at M&S have been reduced by 13.5 per cent in the past financial year and incremental IT spend dropped by 60 per cent during 2007-8, with the overall cost of technology remaining flat despite extra costs introduced by the retailer’s change programme.

However, M&S has cut capital expenditure down from £700m this year to £400m in 2009-10, so there will be pressure to increasingly do more for less.

“You are competing for capital investment across the group, as it all comes from one pot," said Stein.

“It is a real privilege to be given permission to spend under the current economic climate, so when you get it, you have to show that you are economic and you can do as much as possible with the amount of capital you are given.”