Marks & Spencer unveils 75 per cent dip in profits as it prepares to close 100 stores

Retailer announced a raft of closures on Tuesday in a bid to deal with problems in clothing business

Sales in the retailer’s clothing and homeware division dropped by 1.9 per cent (Reuters)

Marks & Spencer has revealed profits fell 75 per cent in the last financial year as sales tumbled, particularly in its troubled clothing business.

The high street stalwart reported post-tax profits of £29.1m for the 52 weeks to 31 March, compared with £115.7m in the previous year.

In the final quarter of last year, UK like-for-like sales dropped 1.6 per cent, while clothing and home sales dropped 3.4 per cent and total group sales fell 2.1 per cent.

For the full year, sales dropped 0.9 per cent, while clothing and home showed a decline of 1.9 per cent. International sales fell 10.2 per cent, after the retailer exited a number of foreign markets.

Shares in the group rose 6 per cent at the open of the stock market, which analysts said was partly because the company’s figures were less bleak than feared.

The company said it was facing facts about the changes it needs to make and admitted that, while online sales are growing, “our online capability is behind the best of our competitors and our website is too slow”.

The group also said it needs to be “decisive with our store estate, renewing and closing stores more quickly”. Diane Wehrle, insights director of retail consultancy Springboard, told The Independent on Tuesday that M&S was “remarkably unimaginative” in the way it currently arranges its shops, and needs to “think carefully about their customer offering and the way they present their stores”.

M&S boss Steve Rowe said: “At our half-year results in November I outlined the need for accelerated change at M&S. The first phase of our transformation plan, restoring the basics, is now well under way and the actions taken have increased the velocity of change running through our business. These changes come with short-term costs which are reflected in today’s results.

“There are a number of structural issues to address and we are taking steps towards fixing these. The new organisation will largely be in place by July and the team is now transforming our culture to make M&S a faster, lower cost, more commercial, more digital business. This is vital as we start to leverage the strength of the M&S brand and values across a family of businesses to deliver sustainable, profitable growth in three to five years.”

The company announced a raft of store closures on Tuesday, as part of its bid to address problems with its cumbersome structure. More than 100 M&S stores are set to close across the UK by 2022.

Laith Khalaf, senior analyst at Hargreaves Lansdown, said the company was “simply struggling to make progress in a world where a compelling mobile app is every bit as important as a presence on the high street”.

He also noted that traditional high street retailers like M&S have faced a “perfect storm” of rising costs, cash-strapped consumers and ever-increasing competitive pressure from online rivals over the past year.

“A physical presence on the high street does still make some sense in a digital world, after all it provides a convenient place for collection and returns. However, the recent store closures that have been announced across the sector tell us the current space occupied by retailers is simply unfit for purpose,” Mr Khalaf said.

“There is a vicious circle at play on the UK’s high streets too – more store closures means lower footfall, encouraging further closures.”