Marks & Spencer has posted half year results for 26 weeks ended 1 October 2016 and given a strategic update ,which includes the closure of around 60 clothing and home stores.
As expected, underlying profits were down by 18.6% to £231.3m, due to lower Clothing & Home sales. Group revenue stood at £4,993.5m, as like-for-like rise of 0.9%.
The group has revealed a five-year plan to improve productivity of its UK Store Estate by repositioning around 25% of Clothing & Home space with costs of aproximately £50m per annum for the first three years, and the continued rollout of Simply Food stores. Total number of M&S stores will increase.
M&S is to focus International business on a franchise model, exiting loss-making owned business across ten markets, at a non-underlying cost of £150m-£200m over the coming 12 month period, thereby eliminating annual losses of £45m.
Steve Rowe, M&S CEO, said, “In May, we laid out a number of questions which we would answer as part of our strategic review. We committed to creating a simpler business with customers at its heart, and taking action to start to recover our Clothing & Home business and continue to grow in Food.
“Our aim is to build a sustainable business which will delight our customers, provide a robust foundation for future growth and deliver value for our shareholders in the long term. We have made good progress on our plans and customers are already noticing a difference, particularly in Clothing & Home.
“In addition, we have made major steps towards fairer pay and pension arrangements, streamlined our senior management team and our plans to implement a simpler Head Office structure are well underway.'
He continued, “We have now completed a forensic review of our estate both in the UK and in our International markets. Over the next five years we will transform our UK estate with c.60 fewer Clothing & Home stores, whilst continuing to increase the number of our Simply Food stores. In the future, we will have more inspiring stores in places where customers want to shop that complement our growing digital offer.
“Internationally, we propose to cease trading in ten loss making owned markets, but intend to continue to develop our presence through our strong franchise partners.
Rowe concluded, “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.”