Retailer reshaping estate
CFO quits and M&S shuts stores as profits dive
M&S is to focus on fewer stores and ramp up online sales (photo: Terry Murden)
Marks and Spencer is to close more stores and slowdown the openings of its Simply Food outlets after announcing a fall in pre-tax profit.
Inflation and the growth of the convenience sector have eaten into its normally reliant food business and it expects in the years ahead to sell a third of clothing and furnishings online.
Chief financial officer Helen Weir is to leave the business but will continue in her role until a suitable successor has been found.
The company gave no numbers for store closures but said it will focus on “high volume” outlets.
Its plans, coming ahead of the crucial Christmas period, were included in figures revealing adjusted pre-tax profits down 5.3% for the half-year from £231.3 million to £219.1m.
Steve Rowe, chief executive said: “We have made good progress in remedying the immediate and burning issues at M&S I outlined last year.
“In Clothing & Home early results are encouraging and in International we now have a profitable and robust business. We recognise now that we face stronger headwinds in food which will be addressed in the year ahead.”
The company’s statement said: “The headwinds facing our Food business have intensified as competitors have encroached on some of our space with the rapid growth of convenience.
“Online home delivery is growing share. Hard pressed consumers are more aware of value and are careful about premium choices. Therefore, although our investment returns remain high, we are slowing our Simply Food opening programme as we reposition our food offer for future growth. Only the highest returning sites will qualify for addition to our store portfolio.
“We have already sharpened prices in core categories and will be taking further steps to bring out value in our ranges. We will increase the pace of relevant innovation, step change our availability and ranging, and continue to develop our Foodhall proposition.
“The business still has many structural issues to tackle as we embark on the next five years of our transformation, in the context of a very challenging retail and consumer environment. Today we are accelerating our plans to build a business with sustainable, profitable growth, making M&S special again.
“We expect our online share of sales to grow very significantly and we are aiming for one third of our Clothing & Home sales to be online in the medium term.
“This, and the better than expected levels of sales transfer from recent closures, means that we are accelerating our UK store rationalisation programme, including closures, space reduction and relocations.
“Our intention is to reshape the estate to focus on high volume locations with conforming store size and fit for purpose back-of-house facilities. We will prioritise a digital first approach in our stores and in our central functions.”
The interim dividend is held at 6.8p