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M&S to close some stores as clothing sales fall

Marks & Spencer is to close 30 stores in the UK and 53 internationally following a drop in profits and clothing sales.

Marks & Spencer

Marks & Spencer

Marks & Spencer

Like-for-like clothing and home sales fell 5.9% for the 26 weeks to 1 October, while underlying profit before tax plummeted 18.6% to £231.3m. Online sales edged up 0.3%. International sales fell 1%. Group revenue edged up 0.9% to £4.99bn. 

On its ailing fashion sales, M&S said product was “key” to its recovery plan and it remained focused on delivering “contemporary wearable style”.

In order to simplify its offer, the business is dropping its Indigo, Collezione and North Coast sub-brands and will concentrate on the brands that are “most relevant” to its customers, such as Autograph, Per Una and Blue Harbour. Drapers reported last year that men’s formalwear brand Collezione was under review and could be axed.

M&S now has 10% fewer clothing lines.

It has also worked on improving availability of key items in stores. The availability of the autumn 16 collections was up eight percentage points, compared to the same period the year before.

Clothing and home gross margin was up 10 basis points to 56.7% during the half. Gains from buying and reduced promotions offset increased currency pressure and higher markdown costs, as “difficult market conditions” resulted in a greater level of Sale stock.

The retailer has launched a five-year plan to improve the productivity of its UK store estate. It will reduce the number of full-line clothing and home stores in the UK by 60. A total of 30 stores will close and 45 will be downsized or turned into Simply Food stores, leading to a net reduction of 10% of clothing and home space.

The programme is expected to cost £50m per year for the next three years, rising to £100m in years four and five.

Internationally, the retailer is planning to close 53 of its company-owned stores and exit 10 “unsustainable” loss-making markets.

The retailer will close 10 stores in China and seven in France, as well as all of its stores in Belgium, Estonia, Hungary, Lithuania, the Netherlands, Poland, Romania and Slovakia. The firm is in consultation with 2,100 employees over the proposals.

It will continue to operate its company-owned stores in the Republic of Ireland, Hong Kong and Czech Republic. It also trades online in 21 markets.

M&S said its franchise business - comprising 267 franchise stores in 34 markets, as well as established joint ventures in Greece and India - made a profit of £87.3m last year and remains in a good position. 

Chief executive Steve Rowe said: “In May we committed to creating a simpler business with customers at its heart, and taking action to start to recover our clothing and home business and continue to grow in food.

“Our aim is to build a sustainable business which will delight our customers, provide a robust foundation for future growth and deliver value for our shareholders in the long term. We have made good progress on our plans and customers are already noticing a difference.

“These are tough decisions, but vital to building a future M&S that is simpler, more relevant, multichannel and focused on delivering sustainable returns.”

Readers' comments (4)

  • Good to see improvement in availability made the difference. Oh...

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  • Belinda Earl needs to go, as do some of the B+M directors and other senior design staff.

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  • their food sales are strong...and not cheap....so instead of cutting corners on clothing perhaps focusing more on good design & product and not penny pinching will get better results and bring back their core customers who like quality products...

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  • very difficult dynamics here. You can only improve availability if you actually know what your customers want and who your customers are - otherwise you just buy more stock in a falling sales environment. With stores closing- there will be less buying power too. Unfortunately a vicious circle. Who knows what M&S's USP is ?

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