M&S is to close more than 80 stores as part of a major business overhaul that will see it retreat from owning stores in 10 countries and reduce its reliance on its poorly performing clothing business.
“We have now completed a forensic review of our estate both in the UK and in our international markets,” said M&S chief executive, Steve Rowe.
Rowe, the M&S veteran who succeeded Marc Bolland in April, has already promised to lower its clothing prices and pay more attention to its most loyal group of shoppers, dubbed “Mrs M&S”. Analysts say these fifty-something women had been neglected as the store chased younger shoppers. M&S is shutting 30 UK stores but a further 45 will have their clothing departments closed or be relocated.
Rowe said it had received a positive response to changes made to its clothing business. “The initial feedback we’ve had from customers has been good,” he told the Today programme. “We’ve improved the fit on many garments and for the first time in a number of years we’ve grown full-price market share.”
He also promised that Brexit-related price hikes were not on the horizon: “We’ve got currency pressures but we intend to mitigate those by better sourcing [and ordering more from suppliers]. Our intention is we won’t have to pass [price rises] on to our customers in the new year.”
M&S said it now planned to focus its international business on a franchise model and would shut loss-making stores in 10 markets and cut 2,100 jobs overseas . The closure of 53 stores will cost the retailer £150m to £200m over the next 12 months. The closures include 10 stores in China, seven in France, and all stores in Belgium, Estonia, Hungary, Lithuania, the Netherlands, Poland, Romania and Slovakia.
Rowe said: “Internationally, we propose to cease trading in 10 lossmaking owned markets, but intend to continue to develop our presence through our strong franchise partners.
“These are tough decisions, but vital to building a future M&S that is simpler, more relevant, multichannel and focused on delivering sustainable returns.”
In the UK, M&S said it would boost the sales productivity of the remaining chain by reducing the floor space devoted to clothing and homeware by 25%. The space changes will cost the business £50m a year for the next three years.
The strategy update came as the retailer reported a 19% fall in underlying profits before tax to £131.3m in the six months to 1 October. Like-for-like clothing and home sales fell 2.9% in the second quarter, better than the 3.9% fall predicted by analysts.
The performance compares with a drop of 8.9% in the first quarter – the biggest fall in its clothing sales since the 2008 financial crisis. Like-for-like sales at M&S food stores were down 0.9%, in line with the previous period.
(The Guardian)
