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 - 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.
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'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.
