New profits slide at Marks & Spencer as sales head south

● Earnings down two- thirds at £ 66.8m as boss pledges ‘ accelerated’ change

Embattled retail bellwether Marks & Spencer, in the throes of a big store closure programme, has seen its annual headline profits slump as sales have again fallen at both its clothing and food businesses.

M& S reported a near twothirds dive in statutory pretax profit to £66.8 million in the year to 31 March, as it was dragged down by £ 321m in costs linked to the store closures.

The group has said it wants to close 100 or more under- performing stores by 2022 under chief executive Steve Rowe and retail doyen Archie Norman, the latter having joined the retailer last autumn.

Underlying pre - tax profits, with exceptional costs excluded, fell 5.4 per cent to £ 580.9m.

City analysts say M& S, whose shares have fallen 26 per cent in the past 12 months, risks being turfed out of the FTSE 100 index next week, where it has been a blue - chip stock since the Footsie’s launch in 1984.

It is now worth less than both online grocer Ocado and online fashion retailer Asos, starkly illustrating how shopping habits have changed in only a decade.

On top of the drastic store closure programme, now including outlets in East Kilbride and Falkirk, M& S revealed yesterday that same-floorspace sales had deteriorated in its fourth trading quarter.

Clothing and home sales were down 3.4 per cent, worse than the previous quarter’s 2.8 per cent drop, and food sales fell 0.6 per cent, against a third quarter drop of 0.4 per cent.

Rowe, an M& S lifer who became the boss two years ago, said: “If anything the need for change has become more urgent. Accelerated change in the business is therefore our only option.”

The retailer’s troubled clothing arm saw like- for- like sales fall by 1.9 per cent in the year. Comparable food sales were down 0.3 per cent.

But overall revenue nudged up 0.7 percent to £10.7 bil- lion, and the dividend is held at 18.7p.

Rowe added :“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.

“These changes come with short-term costs which are reflected in today’s results.”

Leith Khalaf, senior analyst at Hargreaves Lansdown, said: “M& Sis currently teetering on the edge of relegation from the FTSE 100 in the quarterly reshuffle next week.

“Marks & Spencer has held a spot in the FT SE 100 since the index began in 1984. If it is ejected from the FTSE 100 it would be a hugely symbolic moment, made more poignant by the fact that [ internet food retailer] Ocado looks likely to enter the blue- chip index.

“It paints a picture of the old economy and the new, passing each other in very different directions.”

The latest wave of store clo - sure swill affect M& S clothing and home stores that have underperformed for years. A total of 14 new closures were announced on Tuesday.