By James Simons-
Marks and Spencer will loose millions of pound due to mismanagement practices over s long period of time.
The retailer on Wednesday said the costs of shutting stores will require exceptional charges of more than £320m to compensate for, and expect a further £150m of charges to be incurred as its closure programme unfolds. More than 600 employees face losing their jobs as a consequence of the decision, which the retail giant insisted was critical to its “wider five-year transformation plan to make M&S special again”.
Loss of jobs arising due to company closures is nothing new in the business industry. Its effects can be devastating, but the retailer said they would be doing their best to limit redundancies arising from the closures.
M&S director of retail Sacha Berendji said the company will be working to make as few cuts as possible.
She said: “We don’t want any colleagues to leave M&S and we will work with each colleague individually on what is best for them as we endeavour to give everyone a role.
“However, we accept in some cases we may have to consider redundancy.
“We believe these changes are vital for the future of M&S and we will continue to accelerate the programme, taking tough but necessary decisions, as we focus on making M&S special.”
Marks and Spencer announced back in November 2016 that they were looking to seriously shake up the lowest 100 performing stores across the country with closures or big changes
Marks & Spencer’s boss has admitted that the company needs “urgent” change following n all year round profits collapse.
M&S admitted on Tuesday that it would increase the number of UK “mainline” stores earmarked for closure to at least 100, from a previous target of 60. It trades from about 300 such stores, alongside 39 outlets and almost 700 food stores, some of which are franchised.
The investment will continue in online capability; the retailer acknowledged that “our website is too slow” and the fulfilment warehouse “has struggled to cope with peak demand”.
M&S reported a 62.1% fall in pre-tax profit to £66.8 million in the year to March 31 after being dragged down by £321.1 million in costs linked to store closures. Since 2016, 21 branches of M&S have already shut down, so the doom facing the company has been gathering pace for a while.
The revelation comes less than 24 hours after M&S announced plans to shut more than 100 outlets by 2022 as part of a five-year transformation programme. The company has drastically reduced the number of general stores to reflect the fact that customers are switching to online shopping. Marks and Spencer which was formerly reputed for its high quality is believed to have dropped its standards
High streets are already facing a threat with the loss of chains such as BHS and Toys R Us. With House of Fraser, Carpetright, and New Look also planning to close shops, news that M&S are soon to follow suit is bad business for shopping centres across the UK.
Other restaurant chains including Jamie’s Italian, Carluccio’s, Byron and Prezzo, are shutting outlets.
The increased M&S closure figure includes 21 branches that have already been shut since November 2016.
URGENT
Chief executive Steve Rowe says the “need for change is urgent” and a plan “to restore the basics” is underway, noting that Wednesday’s results reflect the costs that come with the transformation.
company is dramatically reducing the number of general stores to reflect the fact that customers are switching to online shopping.
Rowe added: ‘At our half-year results in November I outlined the need for accelerated change at M&S.
‘The first phase of our transformation plan, restoring the basics, is now well underway and the actions taken have increased the velocity of change running through our business. These changes come with short-term costs which are reflected in today’s results.’
He added: ‘There are a number of structural issues to address and we are taking steps towards fixing these.
‘The new organisation will largely be in place by July and the team is now tackling transforming our culture to make M&S a faster, lower cost, more commercial, more digital business.
In April, the retailer had 300 general stores selling clothing, homeware and food, with 696 Simply Food branches and 39 Outlet stores.
PROPOSED CLOSURES
However, on Tuesday, the retailer named the next 14 clothing and home stores that will close, or are proposed for closure, in 2018/19.
They include Bayswater in West London, and outlets in Newton Abbot, Devon, Fleetwood, Lancashire- all of which will be shut down by the end of July. Other branches to be shut down by early 2019 include Branches in Clacton, Essex, and Holloway Road, North London, will close by early 2019 as new Simply Food stores open nearby.
The other nine are in Darlington, East Kilbride and Falkirk in Scotland, Kettering in Northamptonshire, Newmarket in Suffolk, New Mersey Speke in Liverpool, Northampton, Stockton-on-Tees, and Walsall in the West Midlands.
Sacha Berendji, M&S retail director, said the closures were ‘vital to the future of M&S’ and would make it ‘more relevant to our customers’. The company said it hopes to redeploy more than 600 staff before considering redundancies.
They include Bayswater in West London, and outlets in Fleetwood, Lancashire, and Newton Abbot, Devon – which will all be shut down by the end of July. Branches in Clacton, Essex, and Holloway Road, North London, will close by early 2019 as new Simply Food stores open nearby.
The other nine are in Darlington, East Kilbride and Falkirk in Scotland, Kettering in Northamptonshire, Newmarket in Suffolk, New Mersey Speke in Liverpool, Northampton, Stockton-on-Tees, and Walsall in the West Midlands.
Sacha Berendji, M&S retail director, said the closures were ‘vital to the future of M&S’ and would make it ‘more relevant to our customers’. The company said it hopes to redeploy more than 600 staff before considering redundancies.