Marks & Spencer has seen full-year profits collapse as the high street giant counts the cost of a brutal store closure plan.
After taking account of adjusted items of £514.1m, including the charge relating to store closures, pre-tax profit was £66.8m, a 62% fall.
Marks & Spencer (M&S), one of the best known names in United Kingdom retail, first said it would reduce the amount of store space devoted to clothing and homewares in 2016, shortly after company lifer Steve Rowe became chief executive.
The full-year results are slightly better than the City had feared but continue the longterm decline in profits that M&S has experienced from a decade ago, when it reported profits of £1 billion.
The discount clothing chain will see its market share rise to 7% while M&S will see a drop to 7.6%. "Accelerated change is the only option".
M&S made a pretax profit before one-off items of 580.9 million pounds in the year to March 31, particularly hurt by a decrease in the food gross margin. Is now well under way and the actions taken have increased the velocity of change running through our business. Analysts are expecting pre-tax profits of £573m, which would be down from £613m in the previous financial year.
The group plans to move about a third of its sales online and reduce the floor space devoted to its struggling clothing and home division.
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The high-street chain which has a total of one thousand and thirty-five stores at the end of 2017-18 fiscal year, would be publishing its yearly results today.
In support of these changes, M&S expects capital expenditure of £350-400mln in 2019 but sees United Kingdom costs falling by up to 1% due to cost efficiencies and lower depreciation. "The new organisation will largely be in place by July and the team is now tackling transforming our culture to make M&S a faster, lower cost, more commercial, more digital business", said Chief Executive Steve Rowe.
"In the a year ago traditional retailers like Marks have faced a flawless storm of rising costs, a constrained consumer, and the relentless growth of online competition", said Hargreaves Lansdown analyst Laith Khalaf.
Rowe said it was targeting sustainable, profitable growth in three to five years time.
The company also warned that its website was "too slow", adding it was lagging behind online competitors.
"We do not think the downgrade cycle may yet be over", said analysts at Liberum, maintaining their "sell" rating.