M&S posts 62% slump in pre-tax profit

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M&S posts 62% slump in pre-tax profit

Figures for the period to the end of March this year show pre-tax profits fell from £176.4 million to £66.8 million with the company shouldering exceptional costs of £514 million - a large chunk of which was the closure costs.

"We have been clear about our plans to accelerate our store closure program and the action we must take to build a business with sustainable, profitable growth", an M&S spokesperson said.

One-off costs came in at GBP514.1 million for the year, up from GBP437.4 million last year.

On Tuesday, M&S said it would close 100 United Kingdom stores by 2022, as it strives to make at least a third of clothing and home sales online.

In the final quarter of 2017, like-for-like (LFL) food sales in the United Kingdom declined 0.4% year-on-year, joining the Clothing & Home division in the ex-growth doghouse; the latter saw LFL sales decline 2.8% from a year earlier.

The retailer had a total of 1,035 United Kingdom stores at the end of its 2017/2018 financial year.

Credit Suisse has predicted a 4.5% decline in pre-tax profit to £539mln in fiscal year 2018/19, driven by weak like-for-like sales but with less pressure from foreign exchange headwinds. M&S highlighted the continued migration of shopping for clothing and home online, together with the development of global competition and discounters as threats to its business and market position, which led to the decision to accelerate its transformation plan to modernise its business.

He added: "There are a number of structural issues to address and we are taking steps towards fixing these".

In today's statement on the annual results, M&S again restated its online sales target and admitted that it has - thus far - been playing catch-up because its "online capability is behind the best of our competitors and our website is too slow".

Sacha Berendji, the Marks & Spencer retail, operations and property director, said: "Closing stores isn't easy but it is vital for the future of M&S. Our supply chains in both Clothing & Home and in Food require significant upgrades, so that we can be faster to market, reduce high stock levels in Clothing, and improve availability and waste in Food".

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