M&S to close 14 Clothing & Home stores by 2019

Out with the old in with the new

Marks & Spencer has seen full-year profits collapse as the high street giant counts the cost of a brutal store closure plan.

The high street chain's pre-tax profits have plunged 62.1 per cent to £66.8 million after £514.1 million of exceptional charges, including £321.1 million linked to its store closure programme.

M&S, one of the best known names in British retail, made a pretax profit before one off items of £580.9m in the year to March 31.

Shares in M&S were down 3 percent at 1017 GMT. "Accelerated change is the only option".

The supermarket chain reported a 5.4pc fall in full-year profit, a second straight decline, hurt by a weakening in the food profit margin. It is now worth less than both online grocer Ocado (OCDO.L) and online fashion website ASOS (ASOS.L), starkly illustrating how shopping habits have changed in only a decade. Analysts are expecting pre-tax profits of £573m, which would be down from £613m in the previous financial year. "Alongside relocations, conversions, downsizes and the introduction of concessions, these closures will radically reshape M&S's clothing and home space".

In support of these changes, M&S expects capital expenditure of £350-400mln in 2019 but sees United Kingdom costs falling by up to 1% due to cost efficiencies and lower depreciation.

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Marks & Spencer also says that "the acceleration of M&S's United Kingdom store estate programme is part of M&S's wider five-year transformation plan".

The company further updated investors on its transformation programme today, with chief executive Steve Rowe saying that the first phase of the plan, dubbed "restoring the basics, ' was 'well underway". But like-for-like food sales dropped 0.3% with the group blaming intense competition.

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", Rowe added.

"This is vital as we start to leverage the strength of the M&S brand and values across a family of businesses to deliver sustainable, profitable growth in three to five years".

"Until recently the food business was the bright spark which kept hopes for growth from M&S alive, but now that seems to have dimmed too", said Laith Khalaf, senior analyst at Hargreaves Lansdown.

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