Marks & Spencer chief executive Steve Rowe has said “more than 100 stores” will close as the retailer forges ahead with its turnaround plan.
M&S is in “the heart” of the first phase of its most recent three-to-five year turnaround programme, part of which involved the closure of 100 unprofitable UK stores. Of those, 29 have shut so far, but today Rowe said there will be further closures as M&S “catches up” with competitors and implements an approach of “constant churn” towards its store portfolio.
“It will be more than 100 stores,” said Rowe. “We need 100 store closures to get us into the right shape to reach our goal of one-third of sales coming from online, but we won’t stop the programme.
“We need to continue the churn consistently to make sure we are in the right locations, and to make sure our stores are fit for the future and have inspirational environments. We need to catch up with other retailers [who do the same].
“We are dealing with a legacy estate of smaller, high street stores. We are working with landlords and councils. We need to reduce our rents with landlords. The days of rents only going up are gone. We need to get the right price.”
Rowe stressed that the strategy was not to cut jobs, and of the stores closed so far, 83% of colleagues had been redeployed.
In the six months to 29 September group revenue fell 3.1% on 2017 to £4.9bn. Profit before tax and adjusting items was up 2% to £223.5m.
Clothing and home sales continued to drop, and were down 2.7% on 2017 following the store closures.
Like-for-like sales of clothing and home were down 1.1%.
Rowe told Drapers he hoped the clothing and home division would return to growth next year: “We are pleased with our progress and our performance in key areas like lingerie, footwear, schoolwear, but there have been a few misses,” he admitted.
During the half-year the prices of 1,000 clothing lines were reduced and M&S said customers were responding positively to the changes. In womenswear 19% of sales now come from the lowest-price “good” bracket, up from 7% in 2015/16.
The retailer said it wanted less complexity in its collections and more newness throughout the season. It will reassess its clothing sub-brands and reduce the number of styles.
“We have too many lines and we’re not buying deeply enough. There will be a further reduction in options in spring next year,” said Rowe. “We need to make sure they reflect our younger customers and contemporary handwriting.”
M&S is also adjusting its sizing by introducing a slimmer fit for younger customers, and will change its sizing ratios to improve availability of smaller sizes.
Although the retailer wants to attract younger, family-orientated consumers, chairman Archie Norman stressed it would not alienate its core, more mature customer base: “We have older shoppers that may be 55 but they want to look 35. They want good, quality products. We are number one for back to school – those kids have mums and they are shopping with us. We need to broaden our appeal to become more stylish and better value. We are not walking away from any one customer group.”
M&S is also focusing on improving availability and has increased capacity at its distribution centre at Castle Donington in the Midlands by a third since this time last year.
“Last year a lot of our lines sold out,” said Rowe. “Our availability is improving, but we’re still in a position where we are buying too broad and too shallow, and we haven’t optimised our sales. We’re looking at our supply chain end to end, and are hoping to see improvements next year.”
Rowe said M&S had made some progress with improving its digital offer, and more than 20% of clothing and home sales now take place online: “We have improved our photography and extended our cut-off deadline for next-day delivery from 8pm to 10pm.
“Our product download time improved by one second, but we are nowhere near best in class. There is lots more to do to improve delivery options and increase conversion and speed.”