// M&S is to speed up its store transformation programme that will see it close more than 25% of its full-line stores, which sell clothing and homewares, in three years instead of five
// However, M&S will open 104 Simply Food stores that it deemed higher productivity
M&S is to speed up its store overhaul, closing more than 25% of its bigger shops that sell clothing and homewares in three years rather than five, while opening more than 100 new Simply Food branches.
The retailer told investors today that it would accelerate its store right-sizing plans as it grapples with “significant cost headwinds”.
It revealed that staff costs were up 7% this year, while energy costs were £40 million higher than planned.
It said without support, it would face a £100 million headwind in energy costs next year.
The retailer plans to close 67 “lower productivity full line stores”, which will bring the total of stores that sell M&S full range of food, clothing and homewares to just 180.
However, it will grow its “high productivity” Simply Food stores by 104 outlets.
The acceleration comes as M&S’s online clothing and home sales soar. The retailer is aiming for 50% of sales in the categories to come via ecommerce, as it cuts clothing and home space by 20%.
The retailer used the example of its new store in Llandudno, where despite cutting clothing and home space by 5%, sales had increased 35% on pre-Covid levels. Meanwhile the 29% increase in food space had resulted in a 75% growth in sales.
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Despite the tough economic climate, M&S is targeting 1% market share growth in both food and clothing.
It is also eyeing margin improvement and aims for its margin in food to hit 4% and clothing and home to exceed 10%.
International is another growth area for M&S, which is aiming to double operating profit from this division by 2028.
Cost savings
New M&S chief executive Stuart Machin declared that “cash is king” as the retailer aims to make £400 million of structural cost savings by 2028.
The retailer is aiming to make £150 million worth of savings in the next 12 months with a further £150 million set to be found in the following 24 months.
However, the retailer pledged to make a £200 million investment in value across both food and clothing and home as it flagged that consumers are currently “seeking value everywhere” in its business.
M&S is set to unveil its first-half results, its first under Machin, next month. In its full-year to April 2, pre-tax profits before adjusting items hit £522.9million, up from £403.1million two years ago, before the onset of Covid.
