Marks and Spencer has announced a far-reaching store closure programme affecting one in 10 of its clothing stores in the UK and most of the overseas outlets it owns, as the company battles to turn itself round after years of market share losses.
The chain will stop selling clothes at a further 45 UK locations, replacing its existing full-line outlets with much smaller Simply Food stores. The overhaul to the company’s store estate will take five years and cost £350m.
Chief executive Steve Rowe, who took the top job in April, has also given up on his predecessors’ ambition of creating a global retailing behemoth, opting to shutter almost all the chain’s stores outside the UK, including a flagship on the Champs-Élysées in Paris that his predecessor opened to loud fanfare in 2011.
The international business sunk to a £43m loss in 2016, and Mr Rowe concluded that it was too small — and knew too little about customers in far-flung places such as China, Estonia and France — to have a chance of making a profit. Only locations in Ireland, Hong Kong and the Czech Republic will be spared.
Operating profit in the six months to October 1 fell 17 per cent compared with the same period a year earlier, to £231m, on flat revenues. M&S attributed the deterioration to falling clothing and homewares sales, which it said was “expected”; the company is enduring its fifth consecutive year of market share losses in apparel.
Steve Rowe said M&S planned to absorb the currency pressures from the weakness of the pound: We’ve obviously got currency pressures that have come on to us recently but we intend to mitigate those through better sourcing, by better volumes with our manufacturers and our intention is we won’t have to pass those price rises on to the consumer in the New Year.
He said 1700 M&S lines had come down in price this Autumn.
On the performance of its struggling clothing division, he said “for the first time in a number of years we’ve grown full price market share”
He dismissed suggestions the company should focus solely on food saying “I believe our customers like M&S as a single unit. They shop both parts of our business and will continue to do so.”