Clothing & Home revenue at Marks and Spencer declined -3.6% in the year to 30th March 2019, driven in part by the retailer's store closure programme, which resulted in a LFL revenue decrease of -1.6%. As of 30th March, 35 full-line stores had been closed as part of the retailer's transformation programme, 26 of them during the financial year described – yet there has been 48 new store openings, and good online revenue growth, with UK Clothing & Home revenue up +9.8%.
Operating costs decreased by -1.2%, with the aforementioned store closures more than offsetting the cost of new space and shift towards the online channel.
The retailer disclosed that despite a strategy of resizing, relocating and new openings, it expects to close a further 85 full-line stores.
Steve Rowe, Marks & Spencer's CEO, comments: “We are deep into the first phase of our transformation programme and continue to make good progress restoring the basics and fixing many of the legacy issues we face. As I have said, at this stage we are judging ourselves as much by the pace of change as by the trading outcomes and change will accelerate in the year ahead.
“Whilst there are green shoots, we have not been consistent in our delivery in a number of areas of the business. M&S is changing faster than at any time in my career - substantial changes across the business to our processes, ranges and operations and this has constrained this year’s performance, particularly in Clothing & Home. However, we remain on track with our transformation and are now well on the road to making M&S special again.”
New initiatives outlined include a shift towards less discounting, more rationalised, contemporary store environments, and the ongoing development of an improved logistics network. Further investment in digital capability will be leveraged in an effort to combine the group's substantial customer databases (encompassing the M&S credit card, Sparks and Ocado).
Marks & Spencer also revealed a plan to devolve more decisionmaking to its store managers, who will now have visibility of their own profits and losses.
The retailer continues to make "good progress" on saving costs, delivering some £100m, during the year on top of the operating costs of the closed stores.
Profit before tax and adjusting items was down -9.9%, but the business' net debt was reduced to £1.5b.