Marks & Spencer admits ‘need for change’ as store closures hit profits

The boss of Marks & Spencer on Wednesday admitted he is facing a Herculean task in turning its fortunes around after a dramatic slump in profits.

Chief executive Steve Rowe said: “There is a lot to do, we can all see the numbers. It’s a self-help story at the moment.”

Pre-tax profits fell by 5.4% to £580.9 million for the year to March 31. However, it was slightly ahead of analysts’ estimates of £573 million. Shares were up 14.1p, or 4.8%, to 305.9p as a result.

But if you take one-off costs into account, the grocer actually made pre-tax profits of £66.8 million — a 62.1% decline after spending £321 million went towards the cost of closing stores.

It will foot another £150 million bill “in the short term” on top of that. Its revenues were flat at £10.6 billion.

The retailer yesterday admitted it will close 100 stores by 2022, putting thousands of jobs at risk, to accelerate the overhaul of the business. “The need for change has become more urgent,” added Rowe.

Marks & Spencer’s sales have been deteriorating as cheaper rivals have piled on the pressure and shoppers have migrated online. Its food same-store sales edged down 0.3% for the year, and clothing and home was down 1.9%. Only 5% of its revenues comes from online sales and it wants that to be 33% over the next five years.

The company has been revamping its top team to help deliver the turnaround, under the close watch of chairman and retail veteran Archie Norman, credited with reviving supermarket chain Asda in the Nineties. It plans to lure younger and larger families to its stores as it slims down its offering on its food, clothes and homeware.

“We have to make sure our food is more relevant to families,” said Rowe.