Marks & Spencer expects higher profits because of higher margins

Marks & Spencer expects higher profits because of higher margins

British department store chain Marks & Spencer has increased its full-year profit forecast because its profit for the first six months had already surpassed expectations. For its full-year forecast, Marks & Spencer believes this trend will continue.

Lower turnover for clothing

Marks & Spencer expects its general merchandise division's gross margin to grow 2 to 2.5 %, which is 0.5 % more than previously expected. Marks & Spencer's general merchandise generates most of its turnover thanks to clothing sales, although that turnover dropped over the first half of 2015. Higher margins meant the company still made a bigger profit.

 

General merchandise's profit margin is now at its highest point since 2010, when CEO Marc Bolland took charge of the company. He has battled disappointing clothing sales for years, which is why he has tried to steadily increased profit margins. There were fewer store discounts and Marks & Spencer has also tried to buy straight from the manufacturers, which lowered costs.

 

Inside sources claim Bolland is considering the acquisition of external brands, to get women back to stores.

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