M&S updated investors on its transformation programme this morning as the company unveiled a drop in annual profits due to falling sales across its clothing arm and food halls. The retailer is planning on closing 110 stores by 2024, including 85 full stores and 25 Simply Food outlets. This is on top of the 35 outlets that have shut to date. M&S added that the 25 smaller Simply Food shops would be closed in favour of 75 larger food halls.
The group warned it remained in the “difficult early stages” of its turnaround programme as it revealed underlying pre-tax profits of £523.2 million for the year to March 30, down from £580.9 million the previous year.
But boss Steve Rowe said there were “green shoots” of a U-turn in fortune as he said M&S is “changing faster than at any time in my career”.
As well as the store closures already planned, the retailer is making changes to its clothing range and will instead be focusing on a smaller number of items.
M&S also detailed plans to bring back its ‘Per Una’ clothing collection.
This is after sales in its womenswear arm dropped 1.6 percent after a 1.3 percent fall in the final three months.
The fall was blamed on the timing of Easter and poor stock availability.
M&S said no job cuts were planned as part of the changes.
Mr Rowe said: “Whilst there are green shoots, we have not been consistent in our delivery in a number of areas of the business.
“M&S is changing faster than at any time in my career – substantial changes across the business to our processes, ranges and operations – and this has constrained this year’s performance, particularly in clothing and home.
“However, we remain on track with our transformation and are now well on the road to making M&S special again.”
Today’s profit update also revealed how like-for-like sales in its food halls fell 2.3 percent following a 1.5 percent decline in the fourth quarter.
This too was also believed to have been affected by the timing of Easter.
M&S shares tumbled four percent after the results came out.
Adam Vettese, analyst at eToro, said: “Despite a widespread love for the brand, Marks and Spencer’s results are unlikely to make an appetising read for retail investors.
“Its share price has lost 30 percent in the last 2 years, the company cut dividend payouts to shareholders by 40 percent back in February 2019 and it has been flirting with relegation from the FTSE100 since 2018, so many will fear widening losses.
“Investor nerves could also be tested as more of the high street brand’s stores close but this could be offset by a joint-venture with Ocado, agreed earlier this year, as more people see the value of opportunities the internet and online shopping provides.”
“But will investors see this as an opportunity or will many continue to heed the price decline and take this as a sign to steer clear?”