Marks & Spencer reports slump in profits
Marks & Spencer has posted a 62.1% drop in full year pre-tax profit as it announces plans to close 100 stores by 2022.
In the year to 31 March, pre-tax profit declined to £66.8 million from £176.4 million in the previous year. Profit before tax and adjusting items, which included £321.1 million relating to the retailer’s UK store closure programme, fell by 5.4% to £580.9 million.
While group revenue edged up 0.7%, like-for-like sales in the UK were down 0.9% in the period.
Steve Rowe, Marks & Spencer chief executive, said: "At our half year results in November I outlined the need for accelerated change at M&S. The first phase of our transformation plan, restoring the basics, 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 today's results.”
A revenue increase of 3.9% in M&S’s food business was driven by new stores although like-for-like sales in the business edged down 0.3%. The retailer said it is embarking on a programme to refresh the offer with more innovation, improved value for money, and a refocus on more popular family products. It is also slowing its new store opening programme while it reviews the format for the business.
In M&S’s clothing and homewares business revenue was down 1.4% with like-for like sales declining by 1.9%. Once again, M&S is looking to transform the offering as it looks to recapture its appeal to family-age customers. It will also reduce the number of lines and phases and offer more "stylish” products while emphasising value.
Meanwhile, international sales were down 10.2% in the year. M&S has already rationalised its international business and is now working to build a more competitive network of mainly franchise led businesses.
The retailer is planning to close over 100 stores by 2022 as part of its wider five-year transformation plan.
Rowe added: "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. 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."
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