Published: Wed, May 23, 2018
People | By Neil Grant

M&S profits slump on store closure costs

M&S profits slump on store closure costs

On an adjusted basis, with costs stripped out, pre-tax profit fell 5.4 per cent to £580.9 million.

The dismal update comes just a day after the company said it would call time on 14 stores, putting 872 jobs at risk in a move that will see 100 shops close by 2022.

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.

M&S is to close 100 stores, amounting to one in three of its core clothing and home branches, over the next four years.

He added: "At our half-year results in November I outlined the need for accelerated change at M&S".

M&S is expected to report a second straight fall in annual profit on Wednesday, and with the retailer's shares down almost a quarter over the previous year it is in danger of soon being booted out of the FTSE 100 index.

The high-street chain, which has already shut 21 branches as part of the overhaul, yesterday expanded its closure plans as it aims to shift at least a third of sales online. Comparable food sales were down 0.3 per cent. Revenue nudged up 0.7 per cent to £10.7 billion.

"The first phase of our transformation plan, restoring the basics, is now well under way and the actions taken have increased the velocity of change running through our business. These changes come with short term costs which are reflected in today's results", said Steve Rowe, Marks & Spencer CEO in a statement.

The retailer's troubled clothing arm saw like-for-like sales fall by 1.9 per cent in the year.

"These, together with a challenging United Kingdom consumer market, mean that we have to modernise our business to ensure we are competitive and reignite our culture".

Sacha Berendji - retail, operations and property director at M&S - said "we are making good progress with our plans to reshape our store estate to be more relevant to our customers and support our online growth plans". Various other issues need to be urgently addressed, including the supply chains in both Clothing & Home and in Food requiring significant upgrades, its online capability being behind the best of its competitors and its sluggish website.

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