The Windsor branch of Marks & Spencer – rebranded “Markle & Sparkle” for Harry and Meghan’s big day – was doing a roaring trade on Saturday. If only the same could be said of the rest of the high street retailer’s sprawling estate.
In a move slammed by unions as “salami-slicing”, M&S on Tuesday revealed the locations of a further 14 stores that are to be closed over the next 12 months. This is in addition to the 22 branches that have already been shuttered by the group as it desperately attempts to revive profits.
But there’s much, much, more meat to be sliced from the M&S salami: in total, more than 100 of its branches will close by 2022, representing one in three of its 300-strong full-line store chain, slashing about 25 per cent of the floorspace devoted to clothing and homewares.
Just over 600 employees are affected by Tuesday’s announcement. But by the time the retreat from the high street is complete, thousands of its store staff will have lost their jobs.
"Closing stores isn't easy but it is vital for the future of M&S," said the group's retail director, Sacha Berendji, stressing that where stores have shut, the group has seen "an encouraging number" of shoppers switch their custom to nearby branches.
Sweeping plans
That appears to have emboldened the retailer, which reports its results on Wednesday, to step up its closure programme. Chief executive Steve Rowe spoke on Tuesday of the "radical transformation plan" under way at the group, but he's not the first M&S chief executive to unveil sweeping plans for improvement and he may well not be the last.
Eighteen months ago, when he was still settling in to the top job, Rowe announced plans to close 30 of the group’s larger stores but to open up 200 Simply Food outlets.
The arrival of retail veteran Archie Norman as chairman eight months ago brought an acceleration of the closure plans and Tuesday's announcement steps up the pace still further.
The problem is that M&S has been attempting to radically reshape its business for quite some time now. It was way back in 1997 that it became the first retailer in Britain to push profits through the magical £1 billion mark but that was followed by a decade of turmoil – boardroom bust-ups, ill-fated overseas expansion and an abortive £9 billion bid from Sir Philip Green.
Not until 2008 would profits at M&S once again top £1 billion, a feat that was achieved by the slimmest of margins – £7 million – and only because the then boss Sir Stuart Rose slashed staff bonuses.
Unfortunately, it’s been downhill ever since. When Rowe presents full-year results to the City on Wednesday, analysts expect him to report that profits have fallen for a second consecutive year. They will be well short of £1 billion at about £573 million, down from £614 million the previous year.
City forecasts
Or at least that’s what the analysts are expecting. M&S has a reputation of managing City forecasts downwards in the run-up to its results announcements, thus enabling it to “beat expectations” on the day. It’s possible that today’s results will do just that; then again, they could be even worse.
Clothing sales will be down once again and the food side, where expansion plans have also been reined in, is expected to see sales fall too. There should be more detail on the accelerated store closure programme, not least the cost of it, which was nowhere to be seen in Tuesday’s statement.
M&S is regarded as public property and everyone has a view, from the shoppers who bemoan the lack of sleeves on summer dresses to those who complain that the quality of the clothes – and the politeness of the staff – is not a patch on what it was in the good old days.
Despite the moans, it’s the retailer every council wants on its high street and the naming of the latest towns to lose their M&S branches was greeted with dismay locally.
Towns such as Falkirk, Kettering, Newmarket and Stockton fear for the future of their high streets, which have already been hit by a raft of retail closures. A further 64 towns have yet to discover if they too will see their M&S shuttered as the news continues to be salami-sliced out.
M&S shares fell 3 per cent on Tuesday, valuing the business at £4.6 billion and putting it at risk of relegation from the FTSE 100 index of Britain’s biggest companies. That really would set the seal on the group’s fall from grace.
Fiona Walsh is business editor of theguardian.com
