Marks & Spencer profits plunge as store closure costs weigh

Marks & Spencer profits plunge as store closure costs weigh

British food-to-clothing retailer Marks and Spencer will shut more than 100 "underperforming" United Kingdom stores in an ongoing restructuring, it said Tuesday.

Tuesday's announcement represents a further step-up of the plan.

"At our half year results in November I outlined the need for accelerated change at M&S", Steve Rowe, Marks & Spencer CEO said.

Despite the hit, shares in the retailer rose as much as 6pc in early trade, as investors were cheered that pre-tax profits with store closure costs stripped out had beaten expectations.

M&S has revealed that it will close 100 stores across the United Kingdom in the next four years. At the end of 2017/18 M&S had 1,035 stores in the United Kingdom, with 300 Clothing, Home and Food, 696 Food-only and 39 Outlet stores.

M&S lost more ground in the fourth quarter, with like-for-like clothing and home sales down 3.4 percent, worse than the previous quarter's 2.8 percent drop, and same store food sales down 0.6 percent, against a third quarter 0.4 percent fall.

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M&S said it made a pretax profit before one-off items of 580.9 million pounds ($778.6 million) in the year to March 31, particularly hurt by a decrease in the food gross margin. Is now well under way and the actions taken have increased the velocity of change running through our business. "These changes come with short term costs which are reflected in todays results".

"Closing stores isn't easy but it is vital for the future of M&S", said retail director Sacha Berendji.

M&S admitted its clothing and home division was failing to attract younger customers and families.

"There are a number of structural issues to address and we are taking steps towards fixing these", Mr Rowe added.

It said online sales were growing, but that its online capability was "behind the best of our competitors and our website is too slow".

"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".