Marks & Spencer steps up overhaul as half-year profits fall
The retail bellwether said it would further “reshape” the clothing arm and was launching a “significant” cost review under its turnaround plan.
High street giant Marks & Spencer has said it will accelerate its clothing store closure plans and slow Simply Food openings as it posted a 5.3% fall in half-year profits.
The retail bellwether said it would further “reshape” the clothing and home arm and was also launching a “significant” review of costs under the next push of its turnaround plan.
It posted underlying pre-tax profits of £219.1 million for the six months to September 30, down from £231.3 million a year earlier.
But like-for-like sales improved in its embattled clothing and home arm, down by a better-than-feared 0.1% in its second quarter after a 1.2% tumble in the previous three months.
Food sales were also 0.1% down in the second quarter.
Chief executive Steve Rowe said: “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.”
M&S said it would reshape the clothing and home chain to focus on the most successful sales locations, while also driving online sales.
It added that it would put the brakes on opening plans for its food-only stores, although it still aims to launch another 80 Simply Food shops over the full year.
The group’s plans to step up its overhaul comes a year after it first announced that it would shut 30 of its larger UK stores, with a further 45 being downsized or converted to food-only, while also axing 53 loss-making international stores.
It has so far completed six of the 30 announced UK closures.
The group also confirmed that it is launching the hunt for a successor to finance chief Helen Weir, who it said is leaving to pursue a “plural career”.
She will remain in the role until a successor is found.
The group said it was seeing signs that the first steps of its recovery plan were working, with a better-than-expected shift of sales from closed stores to nearby outlets.
Under its turnaround, it is also aiming to cut costs to invest in its online sales offering, with a target to have a third of clothing and home sales 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,” it said.
M&S said there would be no further impact on staff under plans to speed up its store overhaul, with the group looking to relocate those affected by shop closures where possible.
The chain said its clothing and home division had performed better in the second quarter to the end of September after an “encouraging” performance from its new autumn range, boosted by cooler weather.
Like-for-like clothing and home sales fell 0.7% overall in the first half, although its action to cut the number of clearance sales saw full-price sales surge by 5.3%.
Revenue lifted 5.7% at M&S.com.