Cost-saving store closure plan costs M&S two thirds of profits

Shares in M&S have fallen 26 percent over the a year ago and the firm is in danger of being booted out of the prestigious FTSE 100 index. "These changes come with short term costs which are reflected in today's results", said Steve Rowe, Marks & Spencer CEO in a statement.

M&S is one of the UK's leading retailers, offering own-brand food, clothing and home products in its 1,433 stores worldwide and online.

Sacha Berendji-the retail, operations and property director at M&S said that that they are making nice advancement with their plans of restructuring their store chains for making them more relevant to the customers and to assist the online growth plans.

Yesterday the retailer revealed the next 14 stores due to for closure under its programme.

Adjusted pretax profit still fell 5.4% to GBP580.9 million, hit by a decrease in its Food gross margin, which fell "more than expected" by 140 basis points during the year.

After taking account of special items of 514.1 million pounds, including the charge relating to store closures, pretax profit was 66.8 million pounds, a 62 percent fall. "Accelerated change is the only option", it said. 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 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", Rowe added.

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

It said online sales were growing, but that its online capability was "behind the best of our competitors and our website is too slow".

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

"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".

"In the previous year traditional retailers like Marks have faced a ideal storm of rising costs, a constrained consumer, and the relentless growth of online competition", said Hargreaves Lansdown analyst Laith Khalaf.

"M&S is simply struggling to make progress in a world where a compelling mobile app is every bit as important as a presence on the high street, and considerably less expensive".

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