M&S to axe stores as Rowe beats a retreat
Marks& Spencer Group Plc announced plans to shut 30 clothing stores in the United Kingdom and switch others to food-only outlets as Chief Executive Officer Steve Rowe unwinds the expansion efforts of his predecessor and seeks to reverse years of lackluster performance.
The retailer will also shutter 53 stores outside the UK and begin consultations with 2,100 workers as it retreats from 10 countries including China and Belgium, it said on Tuesday, while cutting its margin outlook for the year.
“M&S have been trying to dig their general-merchandise business out of trouble for several years, but for now it seems that the time has come to stop digging,” said Phil Dorrell, partner at consultant Retail Remedy.
“By closing stores and cutting jobs without an accompanying announcement on a new strategy, M&S are giving in.”
M&Sveteran Rowe is taking immediate action to address the fashion retailer’s struggles at home and abroad after replacing Marc Bolland as CEO this year.
Domestic clothing sales have been in near constant decline for five years as shoppers defect to nimbler rivals such as Hennes & Mauritz AB and Inditex’s Zara.
International earnings have been weighed down by weak demand in Europe and turbulent economic conditions in Asia and the Middle East.
The domestic closures will take place over five years, M&S said, without disclosing how many jobs will be lost.
The downsizing represents the end of an era for the 132year-old company that was long regarded as the bellwether of UK retailing.
“These are tough decisions, but vital to building a future M&S that is simpler, more relevant, multi-channel and focused on delivering sustainable returns,” Rowe said in the statement.
The domestic closures will reduce the amount of space devoted to clothing and home wares by 10 percent, said the company, which has 304 UK clothing and home stores.
Taken together, Rowe’s actions will lead to the loss of 60 clothing outlets.