Retailer Marks and Spencer said it was accelerating the closure of 68 UK stores as it prepares to withstand “stormy weather” with a “simpler leaner business”.
A spokeswoman said there was “no new news today” to report on the fate of so-called “full-line” stores in Inverness and Aberdeen as concerns remain over whether shops in these cities may be for the chop.
In a half-year update in which it revealed a slump in profits, M&S provided a little more insight into what it was looking for in a “reshaped” chain of shops.
The firm said its estate of 248 large stores contained a “tail of low productivity” shops where profits on clothing and home goods were lower, as well as not reaching expected profitability levels on online sales.
It aims to replace some of these with a “more focused” group of full line stores that are “fit for omni-channel retailing”, offering more space for food retail that includes click and collect capacity and, crucially, are “lower cost to operate”.
It pointed to areas where three “legacy” stores in Colchester and Stevenage were replaced by two of the new format outlets.
In its statement to the London Stock Exchange, M&S said it was “grasping nettles to accelerate change” with an aim to “accelerate a five-year plan to reduce the net store base which currently totals 248 stores down to c.180 through closures and relocations”.
It also highlighted that its profits were also knocked by the cost of higher property taxes after the end of business rates relief.
Business rates burden
The imposition of business rates is once again becoming a major worry for retailers as well as restaurants, bars and hotels.
An expected increase in business rates in the spring may plunge much business into a fight for survival particularly among retailers, figures have shown.
In Aberdeen, M&S currently operates two large stores including a full-line store on St Nicholas Street and a food and homeware shop in Union Square shopping centre.
Inverness has a full-line branch in Eastgate shopping centre.
Meanwhile, M&S Food said it plans to open around 100 bigger format food stores in new locations over the next five years.
Next year ‘more challenging’
M&S said it expects market conditions to become “more challenging” in 2023-24.
It said: “The combined impacts of the cost-of-living squeeze and the most marked rise in the cost of doing business for many years are creating pressure on margins industry-wide.
“All parts of the retail sector will be affected, and this will result in unviable capacity leaving the industry, creating opportunities for the leaner players who remain.”
The gloomy outlook came as it reported a 23.7% fall in underlying pre-tax profits to £205.5 million in the six months to October 1 as it saw double-digit inflation in food costs and suffered a £700,000 loss in its Ocado retail joint venture.
Chief executive Stuart Machin said: “The programme to renew and rotate our store estate is driving sales and quick paybacks, while the M&S App now accounts for over a third of online clothing and home sales.
“Underpinning our business is an improved balance sheet with reduced debt and a strong cash position.”
M&S shares closed 3.4% down to 113.10p
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