M&S annual profit falls as food margins are squeezed

M&S annual profit falls as food margins are squeezed

M&S annual profit falls as food margins are squeezed

Statutory pre-tax profit fell 62% to £66.8m and excluded £514.1m of so-called adjusting items including the £321.1m cost of scrapping stores.

Turnover was broadly flat at £10.7bn.

M&S, one of the best known names in British retail, made a pretax profit before one off items of £580.9m in the year to March 31.

The figure of more than 100 closures includes 21 that have already shut and 14 stores newly identified for closure.

M&S had in November 2016 launched a five-year overhaul of its United Kingdom stores amid fierce competition from supermarkets and budget garment chain Primark - as well as online giants like Amazon.

That was ahead of analysts' average forecast of 573 million pounds but down from 613.8 million pounds made in 2016-17.

M&S chief executive Steve Rowe said there was need for "accelerated change" at the retailer. M&S highlighted the continued migration of shopping for clothing and home online, together with the development of global competition and discounters as threats to its business and market position, which led to the decision to accelerate its transformation plan to modernise its business.

M&S annual profit falls as food margins are squeezed

"The team is now tackling transforming our culture to make M&S a faster, lower cost, more commercial, more digital business", he said, targeting sustainable, profitable growth in three to five years.

The decision to accelerate the closure program was prompted by early results from the closure of a store in Warrington town centre which led to increased sales in a newer off-high-street store nearby.

M&S lost more ground in the fourth quarter, with like-for-like clothing and home sales down 3.4 percent, worse than the previous quarter's 2.8 percent drop, and same store food sales down 0.6 percent, against a third quarter 0.4 percent fall.

"Whilst we think that it is too early for the full impact of the Sugar Tax, in the United Kingdom and Ireland, to be fully realised we will look for comments around the initial implementation and feedback from customers", its analysts said in a note earlier this month.

Rowe's plan is the latest in a series of efforts to update the 134-year-old retailer, which has struggled to compete with the rise of cheap fast fashion chains and low-priced food retailers.

And Toys R Us, electricals group Maplin and drinks wholesaler Conviviality have all collapsed this year.

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