M&S: Not just any upheaval

MARKS & SPENCER is targeting more price cuts and warns more stores could close.

The retailer will already be rid of 100 branches by 2022 in a radical five-year overhaul to save at least £350million,

But it admits “further significant change” is needed to improve its supply chain and boost online sales.

Despite a forecast-beating 2 per cent rise in adjusted half-year pre-tax profits to £223.5million, food sales were down 2.9 per cent and clothing and homeware revenue fell 1.1 per cent.

Chief executive Steve Rowe admitted its food business had become “excessively dependent on short-term promotions and complex and confusing multi-buys” and the clothing business has too many styles and not enough depth, meaning popular lines sell out too quickly.

Rowe said the building blocks are being put in place, including a “largely new, very determined and energetic management team”, to create a “faster, more commercial and more digital business”.

But he warned: “Trading conditions remain challenging and the headwinds from growing online competition and the march of the discounters remain strong. We are expecting little improvement in sales trajectory.

“We have a large legacy-store estate. Many are not fit for the future. The closure programme is on track and there will be more than 100. Modern retailers have to churn their estate consistently to ensure they are in the right places where customers want to shop.”

Tom Stevenson of Fidelity Personal Investing said: “The company is ruthlessly honest about the challenge. It is re-inventing itself on no less than nine different fronts, acknowledging that it has a mountain to climb in both clothing and food, that its management has been weak, its website clunky and its stores old-fashioned.”