M&S store closure costs result in 62% annual profit plunge

M&S profits plunge 62pc amid sweeping store closure plans

It is just one of a few United Kingdom high street giants who have announced store closures and job cuts.

The update comes after the retailer announced the next tranche of United Kingdom stores proposed for closure yesterday, noting that it would now close over 100 stores in total by 2022.

"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", he said.

"This latest wave of closures will feel like a body blow to locations that are already under pressure" says the BBC's Emma Simpson, "but the hard truth is that M&S has more stores than it needs, given our changing shopping habits" and many experts believe that closing a large swathe of stores "is a tough but necessary step". That figure dropped by 5.4pc to £580.9m, with the City predicting a steeper fall to £572.6m.

However, shares in M&S were up 4.5% at 304.90 pence on Wednesday, having hit a high of 311.00p earlier in the session.

The retailer, which had a total of 1,035 stores at the end of its 2017/2018 financial year, will publish its annual results on Wednesday.

Group revenue, however, rose 0.7 per cent rise year-on-year from £10.62 billion to £10.69 billion and total sales in its food division were up 3.9 per cent.

The food, clothing and homewares retailer maintained its full-year dividend at 18.7p.

In support of these changes, M&S expects capital expenditure of £350-400mln in 2019 but sees United Kingdom costs falling by up to 1% due to cost efficiencies and lower depreciation.

The company is looking to improve its website, as well as investing to increase and improve e-commerce capacity, to support its ambition of doubling the online share of its Clothing & Home sales to over 33%.

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

"In the a year ago traditional retailers like Marks have faced a flawless storm of rising costs, a constrained consumer, and the relentless growth of online competition", said Hargreaves Lansdown analyst Laith Khalaf.

"Alongside relocations, conversions, downsizes and the introduction of concessions, these closures will radically reshape M&S's clothing and home space", the firm said.

"And we're concentrating on tackling the culture of the business, making M&S a faster, lower cost and more commercial digital business". Food gross margin is expected to decrease by as much as 50 basis points.

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