M&S to Close More Than 100 Stores Amid Online Push
May 23 2018
The closures represent around a tenth of the clothing and food group's United Kingdom stores, as it grapples with weak consumer spending and intense competition from supermarkets, fashion chains like Zara and H&M as well as online giant Amazon. When Archie Norman was brought in as chairman in September, he said bluntly that "M&S has been drifting and under-fulfilling its promise not for five, 10 but for 15 years".
The company said that Mark and Spencer would be closing more than a hundred stores in total by 2022, which includes twenty-one that has been already closed and the fourteen stores that are as per the announcement today proposed to be closed or are all set to close.
On Wednesday, M&S is expected to report further under performance in its food arm, with analysts projecting a drop in sales, but an improved bottom line.
Marks & Spencer said it urgently had to modernise or risk fading away as it reported a second straight decline in annual profit and booked a £321 million charge for a store closure programme.
"For investors a dividend yield of over 6% is an attractive stopgap, but at the moment Steve Rowe's promise to make M&S special again requires a leap of faith", said Laith Khalaf, senior analyst at Hargreaves Lansdown.
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. Operationally, M&S said it will reposition the Food business in the year ahead to become more "relevant".
He added: "There are a number of structural issues to address and we are taking steps towards fixing these".
"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".
M&S said its store closure programme would reduce costs by at least £250mln and provide a "platform for growth in later phases of our plan". Whilst the fulfilment centre at Castle Donington has struggled to cope with peak demand and some of its systems are dated.
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%.
"These changes come with short-term costs which are reflected in today's results".