M&S profits slump on store closure costs

M&S profits slump on store closure costs

Kerry Wise
May 23, 2018

M&S named 14 stores earmarked for closure, including in London's Bayswater and Holloway Road, with a total of 872 employees affected.

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.

"At our half year results in November I outlined the need for accelerated change at M&S", said Steve Rowe, Marks & Spencer CEO.

Shares in the 134-year-old clothing and food retailer rose as much as 6.5 percent on Wednesday after its underlying profit for 2017/18 beat analyst forecasts, it held its dividend payout and investors covered short positions.

The results were published one day after M&S revealed it will shut more than 100 "underperforming" United Kingdom stores in total.

The full-year results are slightly better than the City had feared but continue the longterm decline in profits that M&S has experienced from a decade ago, when it reported profits of £1 billion. At the end of 2017/18 M&S had 1,035 stores in the United Kingdom, with 300 Clothing, Home and Food, 696 Food-only and 39 Outlet stores.

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Marks & Spencer (M&S) today announced that it has dropped prices on 200 food lines in its "biggest ever" price investment in the Republic of Ireland. In addition, the group is set to close 25 percent of its Clothing & Home space to as sales shift online and investing to increase and improve its commerce capacity to support its aim to double its online sales to more than 33 percent. Actions taken under the plan include the sale and franchise of the firm's retail business in Hong Kong and Macau.

"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".

The company was particularly slow to get its online operations into gear and has admitted its website remains "slow".

"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".

"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".