Britain's M&S to close stores as profits fall

LONDON:  Britain's Marks & Spencer said it would shut stores at home and abroad, with its new boss seeking to cut costs as part of a revival plan that will reduce its UK clothing space and switch the business more towards food.

The retailer, whose shares have fallen 22 percent so far this year, reported an 18.6 percent slump in first-half profit and another fall in quarterly clothing sales.

Steve Rowe, a 26-year company veteran, took over CEO of in April and has the tough task of reviving a 132-year-old British institution that has fallen out of fashion over the last decade.

So far, his priority has been trying to turn around M&S's underperforming clothing and homewares business.

But on Tuesday he outlined how the firm will streamline its British store estate and detailed a rationalisation of its international operations.

He said M&S would reposition about 25 percent of its UK clothing and home space, closing about 30 full line UK stores and changing around 45 stores to only sell food. Other stores would be re-located.

The cost of the programme would be 50 million pounds ($62 million) for the next three years, rising to about 100 million pounds in years four and five.

In terms of expansion, the focus will be on M&S food business, which contributes over half of group revenue and about a third of profit. In May Rowe said M&S would add an additional 200 food shops by 2019.

M&S will also exit its loss-making owned business across 10 international markets, at a cost of 150-200 million pounds over the coming 12 month period, thereby eliminating annual losses of 45 million pounds, leaving it with franchised stores.

M&S reported an underlying pretax profit for its first half to Oct. 1 of 231.1 million pounds along with a 2.9 percent fall in second-quarter underlying clothing sales. Like-for-like food sales were down 0.9 percent.

($1 = 0.8060 pounds)