M&S set to close at least 20 stores on the high street
MARKS and Spencer is preparing to close dozens of stores in a blow to high streets across the country.
Under pressure from the shift to online shopping, the chain will shut at least 20 under-performing outlets but some City analysts believe it will have to go further with as many as 70 closures over the next four to five years.
The move comes amid reports that high street shops are closing at a rate of 15 a day, with fashion outlets particularly hard hit.
The M&S closures – which also affect some stores overseas including a flagship outlet in Paris and others in China – are part of a major shift in policy to devote more floor space to its successful food ranges and build its website sales.
At the same time as closing some older high street stores, the company is opening another 200 of its smaller Simply Food outlets.
It is also embarking on a new approach to fashion, dropping cat-
‘Becoming a burden’
walk fads in favour of classic designs and higher-quality fabrics.
M&S has refused to comment on its plans, which are expected to be outlined on Tuesday. Under City rules, it cannot speak about proposals that could affect its share price before the trading statement.
The loss of more than 20 general stores will be a heavy blow to the town centres involved. The presence of an M&S is crucial in bringing shoppers into an area, boosting trade for neighbouring stores.
There are 352 general M&S stores, which combine food, clothes, furnishings and other products.
City analysts have suggested a savage closure plan is needed, with as many as 70 outlets – one in five – going by 2020. However, it is believed the firm is looking at a smaller number in the range of 20 to 30.
The closures are part of an initiative by chief executive Steve Rowe to reflect changes to shopping habits, chiefly a move away from high streets to retail parks and online shopping.
This change is reflected in the collapse of BHS and the decision by chains including Tesco and Sainsbury’s to abandon opening many planned superstores.
Just this week Next, a fierce rival to M&S which has closed some under-performing stores, reported a dip in sales and warned next year will be tough.
The chain’s chief executive Simon Wolfson said: ‘The macro-economic backdrop doesn’t look exciting. It is likely we will have another year with a difficult consumer environment.’
Tom Gadsby, an analyst at the stockbroker Liberum, said: ‘Major store closures are needed to help restore margins [at M&S]. Its extensive store base, once a source of strength, is becoming a burden.’ He added that a £334million increase in sales through the M&S website since 2012 had failed to make up for a fall of £568million in clothing and home sales over the same period.
‘We find it unsustainable that the company should continue to pay for its store base in the face of declining sales and then pay again for the channel shift by paying to fulfil online orders,’ he said. ‘The inescapable conclusion is to close space.’
City analysts expect likefor-like sales at the firm’s general merchandising division, with includes clothing, to fall by 3.9 per cent in the second quarter. Investec is predicting a 23 per cent fall in half-year underlying pretax profits to £218million.
Jonathan De Mello, of the retail property advisers Harper Dennis Hobbs, believes M&S could close one in five stores by 2020, but admits this will be difficult ‘because it changes the fabric of the high street’.
There were 15 shop closures a day in the first half of 2016 and new openings fell to the lowest level for five years, according to the accountants PwC and the Local Data Company. Some 206 fashion shops closed and 119 opened – a net decline of 87.