M&S to shut 30 stores in shake-up focusing on food
Marks & Spencer is to axe 30 UK stores and slash shop space devoted to its ailing clothing ranges as it focuses more on food under a sweeping overhaul.
The high street giant also warned of around 2,100 job losses under plans to shut 53 shops across 10 overseas markets, including China and France.
Chief executive Steve Rowe announced the latest restructure plans as he revealed that half-year profits crashed 88.4% to £25.1 million, partly due to higher pension costs, while earnings fell 18.6% to £231.3 million on an underlying basis.
The retailer said clothing departments would be shut in 60 of its 304 full-line stores, with 30 stores closing altogether, and 45 shops to be converted into Simply Food outlets, downsized or relocated.
Around 100 stores overall will be affected by the changes over the next five years, it said.
The group remained tight-lipped on the number of UK staff expected to be impacted or which stores would close, but said that, where possible, it would keep "job continuity" for affected employees.
Shopworkers' trade union Usdaw said M&S staff would be "extremely concerned" about where the axe will fall.
Mr Rowe, who took over from Marc Bolland in April, said it was "not about the M&S brand disappearing", adding that the group would have more stores overall under aims to open more than 200 Simply Food outlets.
He said: " These are tough decisions, but vital to building a future M&S that is simpler, more relevant, multi-channel and focused on delivering sustainable returns."
Shares in the group fell 2% as the firm's half-year results underlined the woes facing its clothing arm.
Like-for-like sales in the division fell by 5.9% in the six months to October 1.
But it narrowed the sales decline from 8.9% in the first quarter - its worst performance for more than a decade - to 2.9% in the second quarter.
Same-store food sales fell 0.9% over the half-year, while it saw growth of 0.3% at M&S.com, leaving overall UK like-for-like sales 3% lower.
It also said said profit margins will take a hit from the sharp falls in the pound since the Brexit vote, but will continue to cut prices across its clothing lines and in its food arm as it looks to ramp up sales.
Mr Rowe - a company veteran with 26 years' service - is leading a shake-up to turn around its clothing arm and get group profits back on track.
He has already announced that 525 jobs at the retailer's head office will go in a bid to cut costs, while making changes to staff pay and pensions, as well as cutting back on promotions in favour of lower prices on everyday clothing lines.
The group said the UK restructuring will cost it around £350 million over five years, while its international retreat will come at a cost of £150 million to £200 million over the next year.
The firm currently has 468 overseas stores across 58 international markets, with 194 owned stores and 274 franchise stores.
Analysts at Peel Hunt said the overhaul was "far more aggressive than we were expecting".
But they said there were "early signs" of progress under Mr Rowe's restructure.