Marks & Spencer is to shut 32 more stores as it shifts away from town centres, saying many have “lost impetus” as a result of failed local authority or government policy.
The high street bellwether said profits will flatline in the year ahead amid “increasing cost pressures and consumer uncertainty”.
A decision to fully exit Russia, after temporarily pausing deliveries in the light of the war in Ukraine, will cost it £31m, while new EU tariffs and border costs relating to Brexit had cost £29.6m in profits and £15m in lost trade.
The retailer said it will shift away from multi-floor buildings to more modern edge of town sites, such as former Debenhams, with better access and car parking, with plans for 15 new full-line stores and 40 food outlets over the next three years.
That compares with 10 new stores opened over the past year. It said it would reduce space devoted to clothing and homewares further as sales were down by almost a quarter compared with four years ago, while space had dropped by only 10%.
It will raise £200m by selling off old stores to help fund the expansion as it said that sales in city centres were down 14% and high streets down 8% on pre-pandemic levels, while sales rose 22% in retail parks. Stores in travel hubs, including stations and airports were down 39%, largely as a result of pandemic restrictions and the shift towards working from home.
“We recognise that in an omni-channel world, ease of shopping and fast access is critical to competitiveness, and in many cases we believe the town centre locations have lost impetus as a result of failed local authority or government policy. As a result, a high proportion, but not all, of our relocations are to the edge of town,” M&S said in a statement.
M&S revealed a return to full-year profitability in the 12 months to 2 April, notching up £391.7m before tax compared with a loss of £209m a year before as sales rose 18.6% to £10.9bn. Food sales rose 10% while clothing and home sales rose 3.8%, driven by online growth. Sales at its Ocado joint venture were down 4% as shoppers returned to buying groceries in stores.
Steve Rowe, the outgoing chief executive of M&S, said the figures: “Demonstrate that M&S has fundamentally changed. While there is much more to do, the business has moved beyond proving its relevance and has the opportunity for substantial future growth.”
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M&S to shut 32 more stores as it shifts away from town centres
