M&S focuses on supply chain

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Marks & Spencer is responding to the downturn in the retail market with plans to manage its supply chain more tightly.

Operating profits were down to £372.4m in the half year to 27 September from £488m last year. Chairman Sir Stuart Rose said: “Market conditions and consumer confidence declined through the half, leading to reduced profits year on year, due to lower sales and investment in margin.

“Our plan is to manage the business through the economic downturn by tightly controlling costs, capital expenditure, cash flow and stock.”

The group saw its UK distribution costs rise 14.4 per cent to £199.9m in the half year, which it said reflected continued growth in both General Merchandise and Food volumes, as well as the impact of strong growth in M&S Direct and higher fuel prices.

It has cut back capital expenditure to £700m this year and to £400m next year. Going forward, the focus of investment will move from store modernisation to investment in supply chain and information technology which, it says, will drive improvements in costs and operating efficiencies over time.

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