Modernise and speed up vow by M&S chief
MARKS & Spencer is speeding up plans to modernise after changing shopping habits and increased competition hit food and fashion sales.
Chief executive Steve Rowe said the need for faster radical change had been highlighted by annual results showing a 62.1 per cent drop in annual pre-tax profit to £66.8million.
This included a £321.1million charge for a store closure programme, which will lead to one in three of core clothing and home branches being shut by 2022.
As well as scaling back high street presence, Rowe admitted supply chains in food and clothing need “significant upgrades”.
The website is too slow and the distribution centre at Castle Donington has struggled to cope with peak demand.
Rowe said: “The results clearly show why accelerated change is needed in the business. The trading numbers are disappointing. Online growth is behind the market. In both businesses we need to revitalise our ranges and reassert our reputation for value for money.”
Although group revenue edged up by 0.7 per cent to £10.7billion, like-for-like food sales fell 0.3 per cent while clothing and homewares were down 1.9 per cent, despite the first growth in womenswear customers for seven years.
Shares rose 15p to 307p as underlying profit beat expectations and the firm maintained its dividend payout. Rowe described the recent spate of company voluntary agreements under which a number of retailers have struck lower rent deals with landlords as “not particularly good or healthy”.
Chairman Archie Norman said M&S would only trade “where we are getting a good deal and are in the right place”.
Admitting M&S had been through previous “false dawns”, Norman said: “I am convinced this is a turning point in our history. We have had smart people leading M&S, but it hasn’t changed. There is a reason for that.
“The organisation and culture has made it very hard to change. Steve is leading a fracturing of that.”
Rowe said M&S had extended an online grocery trial, but it was not a “vanity” project and he was yet to see “evidence of a sustainable model there”.