Marks and Spencer set to close 40 more stores

Marks & Spencer has reported a 62.1% fall in pre-tax profit to £66.8 million in the year to March 31

Marks & Spencer has been condemned to a second straight year of falling profits after the high street giant racked up a huge bill for store closures, as it prepares to shut 100 shops over the next four years and faces relegation from the blue chip FTSE 100 index.

Revenue rose 0.7% to GBP10.70 billion for the year to March 31, up from GBP10.62 billion last year, but pretax profit dropped 62% to GBP66.8 million from GBP176.4 million.

British retailer Marks & Spencer plans to close more than 100 stores in its home market by 2022, accelerating a drive to re-shape its business as it strives to make at least a third of sales online.

Further to the GBP321.1 million charge, M&S said it expects further accounting costs of up to GBP150 million as it completes its store transformation programme, and continues to expect the cash costs of the programme to be GBP200 million.

Deutsche Bank maintained the shares of MKS in report on Tuesday, January 2 with "Hold" rating.

The radical change in how consumers buy their clothes today is why M&S is hanging by its fingernails onto the top spot as the UK's largest clothing retailer, where it now commands just over 8% of the market, and others have to make themselves distinctive in either inventory, price, or both, to stay ahead.

The British Retail Consortium, a trade association representing the United Kingdom retail sector, has said that sales will likely remain sluggish throughout 2018, and recently warned that weak non-food sales (such as clothing and electronics) are contributing to an "unprecedented period of change the impact of which is being laid bare for us all to see".

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"In the past year traditional retailers like Marks have faced a flawless storm of rising costs, a constrained consumer, and the relentless growth of online competition", said Hargreaves Lansdown analyst Laith Khalaf. Operationally, M&S said it will reposition the Food business in the year ahead to become more "relevant".

M&S said it put around 8% less stock into sale across the year, as a result of its planned removal of two clearance sales.

"The new organisation will largely be in place by July and the team is now tackling transforming our culture to make M&S a faster, lower cost, more commercial, more digital business".

M&S left its dividend unchanged at 18.7p.

"Our fulfilment centre at Castle Donington has struggled to cope with peak demand and some of our systems are dated", it said. "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". "These changes come with short term costs which are reflected in todays results".

Food margins are expected to remain under pressure in fiscal year 2019, with the company predicting a decline of up to 50 basis points.

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