Cost-saving store closure plan costs M&S two thirds of profits

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

Marks & Spencer said it urgently had to modernise or risk fading away as it reported a second straight decline in annual profit and booked a £321 million charge for a store closure programme.

"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". The reorganisation was paced up a year ago.

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

M&S recently announced the next tranche of United Kingdom stores proposed for closure or set to close as it reshapes its United Kingdom store estate with plans to take at least a third of sales online.

Its full year results for the year ended March 31st, 2018, group revenue was up marginally to £10.7 billion, but profit after tax fell 74.8 per cent to £29.1 million from £115.7million.

M&S lost more ground in its fourth quarter, with like-for-like clothing and home sales down 3.4 percent, worse than the previous quarter's 2.8 percent drop, and same store food sales down 0.6 percent, against a third quarter fall of 0.4 percent.

M&S is to close 100 stores, amounting to one in three of its core clothing and home branches, over the next four years.

"Developments in the retail industry since then have reinforced our conviction about the need for the transformation of M&S".

Sacha Berendji-the retail, operations and property director at M&S said that that they are making nice advancement with their plans of restructuring their store chains for making them more relevant to the customers and to assist the online growth plans.

Under a section of its statement titled "Facing Facts", the retailer continued: "Our fulfilment centre at Castle Donington has struggled to cope with peak demand and some of our systems are dated".

Steve Rowe, an M&S lifer who has been CEO for two years, said the firm was taking steps to fix the structural issues.

"The new organisation will largely be in place by July and the team is now tackling transforming our culture to make M&S a faster, lower cost, more commercial, more digital business".

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