Marks & Spencer (M&S) Group PLC announced plans to close 60 UK stores and retreat from 10 countries as chief executive officer Steve Rowe unwinds the expansion efforts of his predecessor in an effort to reverse years of underperformance.
The domestic closures are to take place over five years and reduce the amount of space devoted to clothing and home wares by 10 percent, the London-based retailer said in a statement yesterday, also cutting its margin outlook for the year.
M&S is also to shut 53 stores outside the UK and to start consultations with 2,100 workers.
Photo: Bloomberg
“These are tough decisions, but vital to building a future M&S that is simpler, more relevant, multi-channel and focused on delivering sustainable returns,” Rowe said in the statement.
Rowe this year replaced Marc Bolland as CEO and is taking immediate action to address the UK fashion retailer’s struggles at home and abroad. Domestic clothing sales have been in near constant decline for five years as shoppers defect to nimbler rivals such as Hennes & Mauritz AB and Inditex’s Zara.
International earnings have been weighed down by weak demand in Europe and turbulent economic conditions in Asia and the Middle East.
M&S expects gross margins in its clothing and home business to expand by between zero and 0.5 percentage points this year as a whole, cutting the forecast due to the weakness of the pound. The retailer had previously predicted an expansion of between 0.5 and 1 percentage point.
Underlying group pretax profit fell 19 percent to ￡231.3 million (US$287.44 million) in the first half. That compared with the ￡218 million estimate of 18 analysts surveyed by Bloomberg.
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