Britain's M&S targets rapid change after latest profit drop

Tanya Simon
May 23, 2018

After taking account of adjusted items of 514.1 million pounds, including the charge relating to store closures, pretax profit was 66.8 million pounds, a 62 percent fall.

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

In addition, M&S reported strong cash generation, even after restructuring costs reduced net debt by 107.2 million pounds, enabling the group to maintain a full year dividend of 18.7p. That figure dropped by 5.4pc to £580.9m, with the City predicting a steeper fall to £572.6m.

M&S is one of the UK's leading retailers, offering own-brand food, clothing and home products in its 1,433 stores worldwide and online.

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 past year it is in danger of soon being booted out of the FTSE 100 index.

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M&S admitted its clothing and home division was failing to attract younger customers and families.

"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. "These changes come with short term costs which are reflected in todays results". 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.

"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".

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