London: Marks and Spencer Group Plc (M&S) announced plans to close 60 UK stores and retreat from 10 countries as chief executive officer (CEO) Steve Rowe unwinds the expansion efforts of his predecessor in an effort to reverse years of underperformance.
The domestic closures will take place over five years and reduce the amount of space devoted to clothing and home wares by 10%, the London-based retailer said in a statement on Tuesday, also cutting its margin outlook for the year. M&S will also shut 53 stores outside the UK and start consultations with 2,100 workers.
“These are tough decisions, but vital to building a future M&S that is simpler, more relevant, multi-channel and focused on delivering sustainable returns,” CEO Rowe said in the statement.
M&S veteran Rowe replaced Marc Bolland as CEO this year and is taking immediate action to address the UK fashion retailer’s struggles at home and abroad. Domestic clothing sales have been in near constant decline for five years as shoppers defect to nimbler rivals such as Hennes and Mauritz AB and Inditex’s Zara. International earnings have been weighed down by weak demand in Europe and turbulent economic conditions in Asia and the Middle East.
M&S expects gross margins in its clothing and home business to expand between zero and 0.5 percentage points for the year, cutting the forecast due to the weakness of sterling. The retailer had previously predicted an expansion of between 0.5 and 1 percentage point.
Underlying group pretax profit fell 19% to 231.3 million pounds in the first half. That compared with the 218 million-pound estimate of 18 analysts surveyed by Bloomberg. Bloomberg