The British retailer will shutter roughly 60 clothing and home stores in the U.K. over the next five years and instead focus on growing its Simply Food stores. These changes include a combination of about 30 full-line closures and replacing the rest with Simply Food stores.
“The result will be fewer, more inspirational clothing and home stores that offer customers better range authority in more convenient locations with higher space productivity,” the retailer said in a statement.
In addition, Marks & Spencer will close 53 wholly-owned stores in 10 loss-making markets in the coming 12 months as it switches to a franchise model overseas. This decision affects 10 stores in China and seven in France, as well as all its stores in Belgium, Estonia, Hungary, Lithuania, the Netherlands, Poland, Romania and Slovakia. The retailer already has 267 franchise stores globally.
It’s not the first time Marks & Spencer has executed a mass exit. Back in 2001, then-chief executive Luc van der Velde decided to shut down the retailer’s entire operations in mainland Europe.
Marks & Spencer currently operates about 480 stores throughout Europe, Asia and the Middle East, in addition to its U.K. locations, and has an online presence in 21 markets. The retailer said Tuesday that it will continue to operate owned businesses in the Republic of Ireland, Hong Kong and Czech Republic, which were described as “profitable.”
“These are tough decisions, but vital to building a future Marks & Spencer that is simpler, more relevant, multi-channel and focused on delivering sustainable returns,” CEO Steve Rowe explained. “Our aim is to build a sustainable business which will delight our customers, provide a robust foundation for future growth and deliver value for our shareholders in the long term.”
News of the closures came as Marks & Spencer reported that pre-tax profits plunged 88.4% in the six months ended Oct. 1, from 216 million pounds ($267.8 million) to 25.1 million pounds ($31.1 million).
Underlying pre-tax profits (excluding one-time charges) dropped 18.6% in the same period to 231.3 million pounds ($286.8 million), down from 284 million pounds ($352 million) a year ago. The retailer attributed this decline mainly to lower clothing and home sales, which fell 5.3% overall and 5.9% on a like-for-like basis.
“Product is key to recovering and growing clothing and home and we are focused on delivering contemporary wearable style and being famous for quality wardrobe essentials,” Marks & Spencer said, noting that it now has 10 percent fewer clothing lines for sale and has seen volume improvements at opening price points. “We also delivered on our commitment to improve the ‘fit’ of wardrobe essentials and saw strong performances in core areas such as bras and T-shirts.”
However, gains from buying and reduced promotions in the first half more than offset increased currency pressure and higher markdown costs as difficult market conditions resulted in a greater level of sale stock.
As such, Marks & Spencer is hoping its five-year plan to improve its store estate will result in “fewer, more inspirational” clothing and home stores in places where consumers want to shop.