M&S profits plunge 62pc amid sweeping store closure plans

Saul Bowman
May 23, 2018

The results come a day after M&S said it will shut more than 100 outlets by 2022 as it accelerates a transformation programme that will see thousands of jobs put at risk.

M&S recently announced the next tranche of United Kingdom stores proposed for closure or set to close as it reshapes its United Kingdom store estate with plans to take at least a third of sales online.

Chief executive Steve Rowe said: "At our half-year results in November I outlined the need for accelerated change at M&S".

Rowe's plan is the latest in a series of efforts to update the 134-year-old retailer, which has struggled to compete with the rise of cheap fast fashion chains and low-priced food retailers.

It is just one of a few United Kingdom high street giants who have announced store closures and job cuts.

The closures will affect its clothing and home stores, which have under-performed for several years.

Total UK sales grew 1.8 percent to 9,611.0 million pounds as UK costs were up 1.8 percent during the year due to costs of new space, inflation and channel shift offset by efficiencies and lower incentive costs.


Excluding the restructuring charge, the stores group's adjusted pre-tax profit was down 5.4% to £580.9mln from £613.8mln previous year, weighed by a 140 basis points drop in the food gross margin as a result of a weaker pound pushing up input cost inflation.

Marks and Spencer-the British food-to-clothing retailer would be closing more than hundred "underperforming" United Kingdom stores in an ongoing reform, as was said on Tuesday.

"There are a number of structural issues to address and we are taking steps towards fixing these", Mr Rowe added.

M&S is also improving its website and investing in its e-commerce capacity, including a site at Castle Donington, with the aim of doubling its online share of clothing and home sales to more than 33%.

"That's reflected in the fact M&S is one of the most shorted stocks in the market, with 12% of the company's shares out on loan to those who have bet against it".

"This is vital as we start to leverage the strength of the M&S brand and values across a family of businesses to deliver sustainable, profitable growth in three to five years".

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