M&S says annual profits tumble on restructuring

M&S says annual profits tumble on restructuring

M&S reset its strategy in November, two months after retail veteran Archie Norman joined as chairman, detailing a five-year programme of store closures and relocations, and moves to make its misfiring food business more competitive.

Shares in M&S have fallen 26% over the a year ago and the firm is in danger of being booted out of the FTSE 100 index. "Accelerated change is the only option", said M&S.

The retailer, which had a total of 1,035 stores at the end of its 2017/2018 financial year, will publish its annual results on Wednesday.

"This is vital as we start to leverage the strength of the M&S brand and values across a family of businesses to deliver sustainable, profitable growth in three to five years".

M&S is expected to report a second straight fall in annual profit on Wednesday, and with the retailer's shares down almost a quarter over the previous year it is in danger of soon being booted out of the FTSE 100 index.

That was ahead of analysts' average forecast of £573m but down from £613.8m made in 2016-17. "These changes come with short term costs which are reflected in todays results".

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Pre-tax profit meanwhile dived more than 62 per cent to 67 million pound, while total sales firmed 0.7 per cent to 10.7 billion pound.

"This latest wave of closures will feel like a body blow to locations that are already under pressure" says the BBC's Emma Simpson, "but the hard truth is that M&S has more stores than it needs, given our changing shopping habits" and many experts believe that closing a large swathe of stores "is a tough but necessary step".

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 frustration for long-only investors is that M&S has been in perpetual transition but there remains the need for more patience". Fashion chain New Look, retailer Mothercare, Carpetright and department store House of Fraser are all shutting stores.

And Toys R Us, electricals group Maplin as well as drinks wholesaler Conviviality have all collapsed this year.

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