M&S sales and profits fall amid shake-up
Marks & Spencer has reported a fall in both sales and profits as it continues to implement a major turnaround programme.
Pre-tax profits were down by nearly 10% in the year to 31 March, at £523.2m.
Like-for-like sales, which strip out the impact of new stores, were down by 2.9% for the group as a whole.
Boss Steve Rowe said the firm was making "good progress" and judging itself as much on the "pace of change" as by the trading outcomes.
The retailer, which has 1,043 stores, is part of the way though a big store closure programme.
Like-for-like sales in its food halls fell by 2.3%, although M&S said this was affected by the timing of Easter.
Clothing and home sales were 1.6% lower, dented by the timing of Easter and poor stock availability, while UK like-for-like sales were down by 2%.
Total sales were 3.6% lower because of the store closures.
Mr Rowe said: "We are deep into the first phase of our transformation programme and continue to make good progress restoring the basics and fixing many of the legacy issues we face.
"As I have said, at this stage, we are judging ourselves as much by the pace of change as by the trading outcomes and change will accelerate in the year ahead."
However, he added that although there had been "green shoots", the retailer had "not been consistent in our delivery" in a number of areas.
"M&S is changing faster than at any time in my career - substantial changes across the business to our processes, ranges and operations - and this has constrained this year's performance, particularly in clothing and home.
"However, we remain on track with our transformation and are now well on the road to making M&S special again."
In May 2018, M&S announced it would close more than 100 clothing and home stores by 2022, of which 85 are still open.
In the last financial year, it closed 35 stores as part of its shake-up and opened 48. Between now and 2024, it expects to close another 85 and open 20.
In these latest results, the company revealed it now also plans to close 25 smaller, low-volume, high-cost food stores and open 75 new and bigger food outlets.
M&S said it had made "good progress" on cost savings during the last financial year, which were about £100m, in addition to the operating costs of stores which had closed.
In February, it announced a joint venture with Ocado to start home delivery next year, which it said was a "strategically compelling route to unlock profitable growth for M&S Food".
Richard Hunter, head of markets at Interactive Investor, said: "The results give proof, if it were needed, that M&S required a significant shot in the arm to give it relevance in the modern day."
He added that there were "also positive signs as M&S transforms apace".
"If there were a real requirement for M&S, however, it would be to consolidate its food offering, while strengthening its online presence to give it security and relevance in the new digital age. The Ocado deal could provide that answer."
M&S had given guidance that at least 100 clothing and home stores would go by 2022. It mentioned a figure of about 110 this time last year.
Now it's provided a bit more detail: the numbers now add up to potentially 120 closures by 2023-24.
It amounts to a 25% reduction in net clothing and home space overall as it tries to modernise its business.
The most eye-catching announcement is its plan to open 75 new food stores.
At the moment, only about a dozen sites offer shoppers the chance to buy the full range of M&S Food, some 6,500 to 7,000 products.
M&S food has always been seen as upmarket and a bit of a treat. The M&S boss wants to broaden its appeal and become more relevant to a family-based customer. The new stores will have parking, for instance.
It means 25 smaller Simply Food stores will either close or be relocated in the process.
Next year, M&S is starting a partnership with online grocer Ocado to provide a home delivery service.
There's an awful lot riding on this expensive tie-up.
With this push into bigger and better food stores as well, M&S is making a play for a larger slice of the grocery market.