M&S to close 100 United Kingdom stores by 2022

M&S profits plunge 62pc amid sweeping store closure plans
M&S store closure costs result in 62% annual profit plunge

23 May, 2018

The retailer, which had a total of 1,035 stores at the end of its 2017/2018 financial year, will publish its annual results on Wednesday. It is now worth less than both online grocer Ocado (OCDO.L) and online fashion website ASOS (ASOS.L), starkly illustrating how shopping habits have changed in only a decade.

The retailer reported a 62.1 per cent fall in pre-tax profit to £66.8 million in the year to March 31 as it was dragged down by £321.1 million in costs linked to a store closure programme.

"We have been clear about our plans to accelerate our store closure program and the action we must take to build a business with sustainable, profitable growth", an M&S spokesperson said.

"In the a year ago traditional retailers like Marks have faced a flawless storm of rising costs, a constrained consumer, and the relentless growth of online competition", said Hargreaves Lansdown analyst Laith Khalaf. "These changes come with short term costs which are reflected in today's results", said Steve Rowe, Marks & Spencer CEO in a statement.

Its full year results for the year ended March 31st, 2018, group revenue was up marginally to £10.7 billion, but profit after tax fell 74.8 per cent to £29.1 million from £115.7million.

Marks & Spencer is the latest high street retailer set for radical restructuring.

In the three months to 30 December, M&S said like-for-like sales fell at its food business, where sales had been rising, as well as at its clothing and homeware division.

M&S profits plunge 62pc amid sweeping store closure plans
M&S says it must accelerate change or fade away

M&S shares were down 2.6% at 292p in afternoon trading on Tuesday.

"Our fulfilment centre at Castle Donington has struggled to cope with peak demand and some of our systems are dated", it said.

M&S said it is taking steps to recover its appeal to "family-age" customers in Clothing & Home, reducing the number of lines and phases, buying "more stylish" products and emphasising value. Under the plan, M&S has the ambition to create fewer, better Clothing & Home stores.

Food margins are expected to remain under pressure in fiscal year 2019, with the company predicting a decline of up to 50 basis points.

"The new organisation will largely be in place by July and the team is now tackling transforming our culture to make M&S a faster, lower cost, more commercial, more digital business".

United Kingdom costs are set to decrease by up to 1%, while capital expenditure is expected to total between GBP350 million to GBP400 million.

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