M&S says annual profits tumble on restructuring

M&S profits plunge 62pc amid sweeping store closure plans

Marks and Spencer (M&S) has revealed steep falls in annual sales and profits, hours after accelerating its store closure programme.

M&S shares - down 7% in the year to date and the biggest fallers on the FTSE 100 on Tuesday - rose 6% in early trading on hopes the worst is behind the 134-year-old retailer.

Back in 2016, M&S embarked upon a five-year overhaul of its United Kingdom stores amid fierce competition from supermarkets and budget garment chain Primark - and particularly from online giants like Amazon. The reorganisation was paced up a year ago.

The supermarket chain reported a 5.4pc fall in full-year profit, a second straight decline, hurt by a weakening in the food profit margin.

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

"We have been clear about our plans to accelerate our store closure program and the action we must take to build a business with sustainable, profitable growth", an M&S spokesperson said. Ahead of the results published on Wednesday, the company said it plans to close more than 100 stories in the United Kingdom by 2022. "These changes come with short term costs which are reflected in todays results".

At M&S's clothing business, which has failed to keep up with trends for many years, revenue fell 1.4% to £3.74bn.

"The team is now tackling transforming our culture to make M&S a faster, lower cost, more commercial, more digital business". 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.

Sacha Berendji - retail, operations and property director at M&S - said "we are making good progress with our plans to reshape our store estate to be more relevant to our customers and support our online growth plans". Various other issues need to be urgently addressed, including the supply chains in both Clothing & Home and in Food requiring significant upgrades, its online capability being behind the best of its competitors and its sluggish website.

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