M&S to close 100 stores by 2022

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

Pre-tax profits have fallen by more than two thirds to £66.8 million for high street giant Marks and Spencer.

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

Rowe said the first phase of M&S's transformation plan - "restoring the basics" - is now well underway, with the actions taken thus far having boosted the "velocity of change". In addition, M&S reported strong cash generation, even after restructuring costs reduced net debt by 107.2 million pounds, enabling the group to maintain a full year dividend of 18.7p. That figure dropped by 5.4pc to £580.9m, with the City predicting a steeper fall to £572.6m.

"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".

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.

"In the previous year traditional retailers like Marks have faced a ideal storm of rising costs, a constrained consumer, and the relentless growth of online competition", said Hargreaves Lansdown analyst Laith Khalaf.

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By 2022, M&S will close more than 100 stores, including 21 that have already been closed and the 14 Clothing & Home stores that are set to close soon.

In support of these changes, M&S expects capital expenditure of £350-400mln in 2019 but sees United Kingdom costs falling by up to 1% due to cost efficiencies and lower depreciation.

Clothing & Home revenue fell 1.4 percent to 3,741.1 million pounds for the 52 weeks to March 31, 2018, with like-for-like revenue down 1.9 percent. It had meant to open 40 stores this financial year, but has cut that number to 25.

The company is looking to improve its website, as well as investing to increase and improve e-commerce capacity, to support its ambition of doubling the online share of its Clothing & Home sales to over 33%. Under the plan, M&S has the ambition to create fewer, better Clothing & Home stores. Food gross margin is expected to decrease by as much as 50 basis points.

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

"The team is now tackling transforming our culture to make M&S a faster, lower cost, more commercial, more digital business", he said, targeting sustainable, profitable growth in three to five years.

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