Marks and Spencer (M&S) has signalled it is to accelerate store closures as it bids to make “significant” cost savings and “reshape” the business.
The chain said it was stepping up its transformation efforts across M&S in a bid to return the company to its former glory as the darling of UK retail, with priority placed on a ‘digital first’ approach.
Shares opened more than 4% higher on the FTSE 100 in response to the news – released alongside its half-year results which showed a 371% leap in pre-tax profits to £118.3m.
However, underlying trading profits were 5.3% down.
M&S reported a fall in like-for-like sales in its usually strong food division and also its clothing & home operation – with sales coming in 0.1% down and 0.7% lower respectively in the six months to 30 September.
Image: M&S is looking to make significant cuts to its cost base
It said Food had seen tougher competition, with total revenue growth of 4.4% driven by new stores.
It said its embattled clothing arm, which has dragged on its financial performance for years, had performed better in the second quarter thanks to a focus on better products at lower prices.
Nevertheless, it announced plans to shut more clothing stores in areas where they were less profitable.
M&S did not give any details but signalled that any job losses would be minimal as its first 30 UK clothing store closures, announced a year ago as part of chief executive Steve Rowe’s drive to bolster profitability, had seen staff redeployed.
Image: Steve Rowe took over at M&S in early 2016
Mr Rowe said on Wednesday: “We have made good progress in remedying the immediate and burning issues at M&S I outlined last year.
“In Clothing & Home early results are encouraging and in International we now have a profitable and robust business.
“We recognise now that we face stronger headwinds in Food which will be addressed in the year ahead.
“The business still has many structural issues to tackle as we embark on the next five years of our transformation, in the context of a very challenging retail and consumer environment.
“Today we are accelerating our plans to build a business with sustainable, profitable growth, making M&S special again.”
M&S said that while it was to slow openings of new food-only stores, it still planned to launch another 80 Simply Food shops over the current financial year.
It also confirmed a story by Sky News on Tuesday that finance chief Helen Weir was leaving the business to pursue, what it called, a “plural career”.