Retailer to shut stores, focus more on food
Print Edition
BRITAIN’S Marks & Spencer said it would shut about 30 stores at home and 53 abroad, including China, with its new boss seeking to revive the retailer by focusing more on food and less on its struggling clothes and homeware ranges.
The retailer, whose shares have fallen 22 percent so far this year, reported an 18.6 percent slump in first-half profit and another fall in quarterly clothing sales.
Steve Rowe, a 26-year company veteran, took over as CEO in April and has the tough task of reviving a 132-year-old British institution that has fallen out of fashion over the last decade.
“These are tough decisions, but vital to building a future M&S that is simpler, more relevant, multi-channel and focused on delivering sustainable returns,” he said.
So far, Rowe’s priority has been trying to turn around M&S’s underperforming clothing and homeware business.
But yesterday he outlined how the firm will streamline its British store estate of over 900 stores over five years and detailed a rationalization of its international operations.
M&S would reposition about 25 percent of its UK clothing and home space, closing about 30 full line UK stores and changing around 45 stores to only sell food. Other stores would be re-located.
The cost of the program would be 50 million pounds (US$62 million) for the next three years, rising to about 100 million pounds in years four and five.
Expansion will focus on M&S’s food business, which contributes over half of group revenue and about a third of profit. In May, Rowe said M&S would add an additional 200 food shops by 2019.
M&S will also exit its loss-making owned business across 10 international markets, including France and China, at a cost of 150-200 million pounds over the coming 12-month period, thereby eliminating annual losses of 45 million pounds, leaving it with franchised stores.
The firm currently trades from 468 overseas stores across 58 international markets, with 194 owned stores and 274 franchise stores.
Rowe has pledged to revive M&S’s clothing by improving ranges and availability, cutting prices and reducing promotions.
However his plan, outlined in May, came with a warning of a short-term dent to sales and profit.
M&S reported an underlying pretax profit for its first half to October 1 of 231.1 million pounds — better than analysts’ consensus forecast of 216 million pounds but down from 284 million pounds a year earlier.
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