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

The move, which has been touted as part of a "radical transformation" plan by the retailer after years of falling sales, represents a "dramatic retreat from the United Kingdom high street that will trigger thousands of job losses" says The Guardian.

The food, clothing and homewares retailer maintained its full-year dividend at 18.7p.

The high street chain's pre-tax profits have plunged 62.1 per cent to £66.8 million after £514.1 million of exceptional charges, including £321.1 million linked to its 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.

"M&S is repositioning itself for the new retail world", said Laith Khalaf, senior analyst at stockbrokers Hargreaves Lansdown.

"These changes come with short term costs which are reflected in today's results", he added.

Marks & Spencer is the latest high street retailer set for radical restructuring. Comparable food sales were down 0.3 per cent. Revenue nudged up 0.7 per cent to £10.7 billion.

M&S has struggled to grow fashion sales for years
Image M&S has struggled to grow fashion sales for years

FTSE 100-listed Marks & Spencer PLC said on Wednesday that profit slumped in its recently ended financial year, as it works to rectify "a number of structural issues".

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%.

M&S shares - down 7% in the year to date and the biggest fallers on the FTSE 100 on Tuesday - rose 6% in early trading on hopes the worst is behind the 134-year-old retailer.

One key question is: will those lost fashion and home sales be recaptured online or in the fewer but better physical locations in the future? "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", said Chief Executive Steve Rowe. Food gross margin is expected to decrease by as much as 50 basis points.

The company said it expects to reduce floor space for clothing and home by 5% in 2019 while the space dedicated to food will be broadly level with the previous year.

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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