Marks and Spencer to shut 80 stores, but none in Republic

British retail giant Marks and Spencer has stressed its commitment to Ireland by saying its operations here will not be affected by its strategic review which will result in around 80 store closures in its UK and international divisions.

Despite better-than- expected first-half results — a profit of £231m (€259m) beat market estimates of £216m, but was still down from £284m last year — M&S yesterday confirmed plans to close and realign a number of stores.

In all 80 are to close over the next five years. That will include all of its 53 centrally-owned non-profitable stores within its 466-strong international shop portfolio, most of which are either joint-venture agreements or franchise operated.

The remaining 30 or so closures will be located in the UK.

M&S’ realignment plan — surrounding new boss Steve Rowe’s attempts to revive the retailer by shifting its focus away from fashion and more towards food — will cost around £550m.

An existing 45 UK stores will be converted into food-only outlets as the group lowers its British clothing floor space by 10% by 2021.

The company has not broken down which stores are set to go, as yet.

As a result, it is not yet known if any of its stores in the North, which come under M&S’s UK operations, are affected.

However, its profitable operations in the Republic are safe from any cuts.

“Marks and Spencer will continue to operate its profitable owned business in the Republic of Ireland, where there is strong brand awareness, an established store estate and loyal customer base,” Alison Grainger, head of region for the Republic said.

M&S owns 17 stores in the Republic and also has an established online presence here.

“These are tough decisions, but vital to building a future M&S that is simpler, more relevant, multi-channel and focused on delivering sustainable returns,” Mr Rowe said yesterday. “This is not about the M&S brand disappearing.

“In fact, with our Simply Food programme we will be in more locations in the future than we are in today.”

Yesterday’s first-half profit drop included a 5.3% fall in clothing and homeware profit. M&S’ lower margin food business contributes over half of group revenues and about a third of profit.

M&S has seen its market share eroded by rivals like Next and a push from supermarkets into clothing, while younger shoppers favour Primark and H&M’s cheaper prices.

Analysts at Liberum in London — who have a ‘sell’ rating on M&S stock — said they had wanted to see more radical action.

“By transferring 30 or more clothing and home stores to Food, M&S looks to play to what has been its strongest suit in recent years as food has outperformed clothing by some distance,” they said.

“We believe, though, that the fortunes of M&S will stand or fall by the performance of the core UK clothing business, and the outlook for that remains highly challenged.”

Last year, M&S’s owned businesses in 10 markets made a loss of £45m on revenues of £171m, and some markets have now been loss making for at least five years.

Its shares closed down by just under 1.9%, at £3.42, in London yesterday, after slumping by over 6% earlier. The shares have plummeted by over 20% this year.

Additional reporting by Reuters