Published: Wed, May 23, 2018
Worldwide | By Sean Reid

M&S announce store closures across the country

M&S announce store closures across the country

Shares in M&S have fallen 26% over the previous year and the firm is in danger of being booted out of the FTSE 100 index.

However, the M&S boss highlighted that these changes come with costs, which were reflected in Wednesday's results.

The move, which has been touted as part of a "radical transformation" plan by the retailer after years of falling sales, represents a "dramatic retreat from the United Kingdom high street that will trigger thousands of job losses" says The Guardian. This includes GBP321.1 million related to the United Kingdom store estate, up from GBP51.6 million the year before - as it accelerated "transformation plans" - with a GBP15.5 million cost related to its IT restructure.

Yesterday, M&S said it would close 100 United Kingdom stores by 2022, further accelerating the plan as it strives to make at least a third of sales online.

Prior to Wednesday's update analysts were on average forecasting an underlying pretax profit of 555 million pounds for 2018-19.

After taking account of adjusted items of 514.1 million pounds, including the charge relating to store closures, pretax profit was 66.8 million pounds, a 62 percent fall.

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Food revenue grew 3.9% in the year - though like-for-like sales slipped 0.3% - while Clothing & Home revenue fell 1.4% and was down 1.9% on a like-for-like basis.

M&S highlighted the continued migration of shopping for clothing and home online, together with the development of global competition and discounters as threats to its business and market position, which led to the decision to accelerate its transformation plan to modernise its business. In addition, the group is set to close 25 percent of its Clothing & Home space to as sales shift online and investing to increase and improve its commerce capacity to support its aim to double its online sales to more than 33 percent.

The closures will affect its clothing and home stores, which have under-performed for several years.

Looking further into its "structural issues", M&S said that although online sales are growing, its online capability is "behind the best of our competitors and our website is too slow".

Rowe said it was targeting sustainable, profitable growth in three to five years time.

"For investors a dividend yield of over 6% is an attractive stopgap, but at the moment Steve Rowe's promise to make M&S special again requires a leap of faith", said Laith Khalaf, senior analyst at Hargreaves Lansdown.

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