The boss of struggling Marks & Spencer on Wednesday said he will wield the axe on more stores as sales continued to fall.
The High Street bellwether, which on Wednesday admitted first-half sales of clothing, home and food all fell, said in May it was planning to close 100 stores by 2020, of which 29 stores have already shut.
Chief executive Steve Rowe, who is trying to turn its fortunes around with help from non-executive chairman Archie Norman, said: “I’m saying that this will continue. I won’t pause at a hundred [stores] and say that’s job done. We must learn the lesson of the past. We need the right stores, in the right sizes, in the right places,” said the M&S lifer.
He refused to name the locations where the shops might shut, saying they are picked “on a case-by-case basis”. Smaller, High Street stores are likely to get the chop as its larger, out-of-town stores are more profitable.
Rowe insisted the wave of closures was not “a job-cut programme” and it was about making sure the business is in the right shape for the future. Some 83% of staff in the 29 shut stores have already moved to new roles.
Although pre-tax profits rose 7.1% to £126.7 million, this was mostly down to its cost-cutting efforts. Revenues fell 3.1% to £4.9 billion.
Investec’s Kate Calvert said: “There is nothing in the statement to make us more positive. It’s still early days in Mr Rowe’s five-year plan with little guidance on phasing of the cost, benefits and portfolio restructuring.”
Marks & Spencer’s sales have been suffering as cheaper rivals have piled on the pressure and shoppers have migrated online.
Same-store food sales fell 2.9%, while clothing and home were down 1.1% for the half year to September 29.
The shares fell 3.2%, or 9.9p, to 292.6p, down from 500p five years ago. Marks & Spencer hopes to make a third of its revenues online, an area it neglected under its former bosses.
It plans to save at least £350 million by the end of 2021 by cutting costs.
The company has been revamping its top team to help deliver the turnaround, under the close watch of Norman, credited with reviving supermarkets chain Asda in the Nineties.
M&S plans to lure younger and larger families to its stores and slim its ranges.
Clive Black of Shore Capital, recently appointed joint broker at the retailer with JPMorgan, was bullish about today’s update and added that “the fire brigade is on the scene”.
“The chairman’s frank assessment of a ‘burning platform’ back in July, leads us first to hope that the hires over the last 12 months represent the arrival of the fire brigade. Investors need to display ongoing patience.”
Rowe said he and Norman are “very close, we get on very well.” He added: “We agree on 70% of the stuff, on 20% of stuff we wrestle to the ground and 10% we don’t agree on.”
It emerged this week that M&S had explored a plan to split its food and clothing arms but decided against it.
EDIT:- Strange that Marks & Spencer are closing stores when in Woking in Surrey (a very small town) are building a huge shopping mall and they will open in 2020. It will also have a Hilton Hotel with conference facilities and underground car parks as well as four tower blocks containing apartments.
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