High street bellwether Marks & Spencer has reported a 10 per cent fall in annual profits as it announced plans to close another 110 stores.
This is the third consecutive decline and follows falling sales across its clothing and food halls. The retail giant said underlying pre-tax profits fell to £523m for the year to March 30, down from £581m the previous year.
The group warned that it is in the “difficult early stages” of its turnaround and progress will not come until the second half of 2019-20.
M&S is to close another 85 full-line stores and around 25 Simply Food outlets on top of the 35 full-line branches closed in 2018-19 under a previously announced restructure.
However, it said the overall size of the chain will remain in line with plans as it also opens and relocates shops, having launched another 48 full-service stores in the past financial year.
It said the food closures follow the decision to focus on larger Simply Food shops with parking access, which will mean shutting and relocating smaller, less busy outlets.
Chief executive Steve Rowe said: “Our strategy is as much about right sizing, relocating and new openings as it is about closures.
“Our overall numbers of stores will remain broadly level.”
Following the announcement, shop workers’ trade union Usdaw renewed its call for recognition as the trade union for Marks & Spencer staff.
Dave Gill, Usdaw national officer, said: “The tragic irony of the company claiming store closures and restructuring had hit profitability will not be lost on M&S staff who are all working under the threat of redundancy. M&S management are not treating their staff with the dignity and respect they deserve.
“Their piecemeal approach to reorganising the business is extremely distressing for the staff. It offers no comfort when a M&S spokesperson was reported saying no decision has been made over which shops will close and that ‘staff will be the first to know’, when the threat of redundancy hangs over every M&S shop worker.”
M&S shares fell 7 per cent as the results confirmed a hefty cut to its shareholder dividend payout, down 26 per cent to 13.9p a share.
Mr Rowe said there were “green shoots” of a turnaround, but added that performance was not consistent and had been hit by its store closure programme and wide ranging revamp plan.
Comparable sales in its troubled womenswear arm fell 1.6 per cent with a 1.3 per cent fall in the final three months after it was hit by the timing of Easter and poor stock availability.
Like-for-like sales in its food halls fell 2.3 per cent following a 1.5 per cent decline in the fourth quarter, although this was also affected by the timing of Easter.
Mr Rowe said: “Whilst there are green shoots, we have not been consistent in our delivery in a number of areas of the business.
“M&S is changing faster than at any time in my career - substantial changes across the business to our processes, ranges and operations - and this has constrained this year’s performance, particularly in clothing and home.
“However, we remain on track with our transformation and are now well on the road to making M&S special again.”
The results showed statutory pre-tax profits rose 27 per cent to £84.6m.
M&S also released details of a £601m rights issue to finance its joint venture with online grocer Ocado. The investor cash call will help fund the deal with Ocado to boost its food offering and online delivery service.