Marks & Spencer has unveiled yet another year of declining profits as the retail giant from the high street counts the cost of the transformation programme of the company.
A 62.1 percent drop in pre-tax profit to £66.8m in the year to March 31 was reported by the retailer as it was dragged down by £321.1m in costs that are linked to its store closure programme.
Steve Rowe, the Chief executive of the company, stated: “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 underway 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.”
The troubled clothing arm of the retailer saw the like-for-like sales drop by 1.9 percent in the year. Meanwhile, its comparable food sales were down by 0.3 percent. Revenue pushed up slightly by 0.7 percent to £10.7bn.
On an adjusted basis and with costs stripped out, its pre-tax profit slipped by 5.4 percent to £580.9m.
Rowe added: “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 tackling 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 latest results come a day after M&S announced that it is set to close over 100 stores by 2022 as it expedites a transformation programme that will have thousands of jobs placed at risk.
The store closures will affect its home and clothing stores, which have underperformed for the past years.
M&S named 14 stores that were earmarked for closure, including in the Bayswater and Holloway Road in London. A total of 872 employees will be affected.
The move is a part of a five-year turnaround plan that was spearheaded by Rowe and chairman Archie Norman.
They have been attempting to save costs through shutting distribution centres and store closures as part of a wide-ranging efficiency drive as the financial performance of the company deteriorates.