M&S sees profits fall by 62% after shelling out £321m on store closure plan

Marks and Spencer is to close 100 stores by 2022 Picture : ANTONY KELLY

Marks and Spencer is to close 100 stores by 2022 Picture : ANTONY KELLY - Credit: copyright ARCHANT 2017

Full year profits at Marks and Spencer have collapsed due to the costs of a brutal store closure programme.

The high street giant reported a 62.1% fall in pre-tax profit to £66.8m in the year to March 31 – dragged down by £321.1m of costs linked to store closures.

The results come a day after the retailer said it will shut more than 100 outlets by 2022 – including in Newmarket and Clacton-on-Sea – as it accelerates a transformation plan that will put thousands of jobs at risk.

Chief executive Steve Rowe said the 'need for change is urgent'.

He added: 'At our half-year results in November I outlined the need for accelerated change at M&S.

'The first phase of our transformation plan, restoring the basics, is now well under way and the actions taken have increased the velocity of change running through our business.

'These changes come with short-term costs which are reflected in today's results.'

M&S's troubled clothing arm saw like-for-like sales fall by 1.9% in the year. Comparable food sales were down 0.3%.

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Revenue nudged up 0.7% to £10.7bn.

On an adjusted basis, with costs stripped out, pre-tax profit fell 5.4% to £580.9m.

Shares were up over 5% following the results, but experts warned that M&S could drop out of the FTSE 100.

'M&S is currently teetering on the edge of relegation from the FTSE 100 in the quarterly reshuffle next week,' said Laith Khalaf, senior analyst at Hargreaves Lansdown.

'Marks and Spencer has held a spot in the FTSE 100 since the index began in 1984.

'If M&S is ejected from the FTSE 100 it would be a hugely symbolic moment, made more poignant by the fact that Ocado looks likely to enter the blue chip index. It paints a picture of the old economy and the new, passing each other in very different directions.'

The latest wave of closures will affect M&S clothing and home stores, which have underperformed for years.

The move is part of a five-year turnaround plan spearheaded by chairman Archie Norman and Mr Rowe.