Marks & Spencer to axe stores at home and globally

LONDON — Marks & Spencer Group announced plans to shutter 53 stores globally, and close another 30 more clothing stores in the UK and switch others to food-only outlets, it said on Tuesday (Nov 8), as as chief executive Steve Rowe unwinds the expansion efforts of his predecessor and seeks to reverse years of lacklustre performance.

The retailer will also begin consultations with 2,100 workers as it retreats from 10 countries including China and Belgium, while cutting its margin outlook for the year.

Singapore stores will not be affected by this cut.

“M&S have been trying to dig their general-merchandise business out of trouble for several years, but for now it seems that the time has come to stop digging,” said Mr Phil Dorrell, partner at consultant Retail Remedy. “By closing stores and cutting jobs without an accompanying announcement on a new strategy, M&S are giving in.”

M&S veteran Rowe is taking immediate action to address the fashion retailer’s struggles at home and abroad after replacing Mr Marc Bolland as CEO this year. Domestic clothing sales havebeen in near constant decline for five years as shoppers defect to nimbler rivals such as Hennes & Mauritz 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.

The domestic closures will take place over five years and cost about 350 million pounds (S$603 million), M&S said, without disclosing how many jobs will be lost. The downsizing represents the end of an era for the 132-year-old company that was long regarded as the bellwether of UK retailing.

“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,” Mr Rowe said in the statement.

The domestic closures will reduce the amount of space devoted to clothing and home wares by 10 per cent, said the company, which has 304 UK clothing and home stores. Taken together, Mr Rowe’s actions will lead to the loss of 60 clothing outlets.

M&S shares rose 1.4 per cent to 343.8 pence at 8.09am in London. They have declined 23 per cent this year, heading for their worst annual performance since 2008.

The majority of the international closures are in the retailer’s European businesses, with M&S planning to completely exit Belgium, Hungary, Poland and the Netherlands.

The retailer will also close seven stores in France and all of its 10 stores in China. The closures will take place over next 12 months and result in costs of 150 million pounds to 200 million pounds.

International businesses that are outright owned by M&S recorded a loss of 31.5 million pounds last year, while its franchised businesses reported a profit of 87.3 million pounds.

Outside its main market of the UK, M&S currently operates about 480 stores across 59 countries in Europe, 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 for the year, cutting the forecast due to the weakness of sterling. The retailer had previously predicted an expansion of between 0.5 and 1 percentage point.

Underlying group pretax profit fell 19 per cent to 231.3 million pounds in the first half. That compared with the 218 million-pound estimate of 18 analysts surveyed by Bloomberg. BLOOMBERG