Published: Wed, May 23, 2018
Global Media | By Garry Long

M&S store closure costs result in 62% annual profit plunge

M&S store closure costs result in 62% annual profit plunge

It is just one of a few United Kingdom high street giants who have announced store closures and job cuts.

Despite the hit, shares in the retailer rose as much as 6pc in early trade, as investors were cheered that pre-tax profits with store closure costs stripped out had beaten expectations.

Back in 2016, M&S embarked upon a five-year overhaul of its United Kingdom stores amid fierce competition from supermarkets and budget garment chain Primark - and particularly from online giants like Amazon. 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.

But analysts have warned the company - once the darling of United Kingdom retail - risks being relegated from the top flight, to be replaced by food rival Ocado, as its market value continues to slide.

M&S has launched a series of turnaround plans since the financial crisis - with clothing and home consistently dragging.

The figure of more than 100 closures includes 21 that have already shut and 14 stores newly identified for closure.

"The first phase of our transformation plan".

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It said online sales were growing, but that its online capability was "behind the best of our competitors and our website is too slow". "These changes come with short term costs which are reflected in todays results".

Steve Rowe, an M&S lifer who has been CEO for two years, said the firm was taking steps to fix the structural issues.

Rowe said it was targeting sustainable, profitable growth in three to five years time.

"M&S is now teetering on the edge of relegation from the FTSE 100 in the quarterly reshuffle next week", said Laith Khalaf, senior analyst at Hargreaves Lansdown.

He added: "M&S is simply struggling to make progress in a world where a compelling mobile app is every bit as important as a presence on the high street, and considerably less expensive". The reorganisation was paced up past year.

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.

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