Marks and Spencer (“M&S”) revealed that by 2022 it intends to close 100 stores. It intends to close 25 per cent of its clothing and home branches, triggering a loss of thousands of jobs. Currently, 36 stores have been confirmed for closures, 14 of which are to close or have been proposed for closure in 2018-2019. 19 clothing and home stores have already closed.
It is estimated that 1500 UK M&S staff have been affected by these closures. Sacha Berendji, M&S’ Retail, Operations, and Property director, said that the company was trying to make its estate more relevant and better able to support the growth of its website.
Berendji also said: “Closing stores isn’t easy but it is vital for the future of M&S… Where we have closed stores, we are seeing an encouraging number of customers moving to nearby stores…” Usdaw, the shopworkers’ union, accused M&S of “salami slicing”.
M&S plan follows a reoccurring pattern in the retail sectors. Mothercare announced that it is to close 50 outlets, potentially leading to a loss of 800 jobs. Prezzo, a popular Italian restaurant, closed 94 of its outlets costing potentially hundreds of jobs.
In the midst of this, M&S has also reassessed its Simply Food programme. It now only intends to open 36 owned and franchise stores over the next six months (as of 31 January 2018). The company’s plans are expected to incur £150 million of charges and it said it would take exceptional charges of more than £320 million in order to cover the cost shutting stores.
Whilst M&S shares increased almost 6 per cent after stating its willingness to take exceptional charges, its shares have fallen by a fifth over the past year under-performing the FTSE 100 wider index. M&S is in danger of being demoted to FTSE 250 at the next index review.