M&S to close more large stores, plan will hit clothing retail space
M&S had more big news this week with the retail giant planning to close around a quarter of its largest stores that sell clothing and homewares earlier than previously forecast. Its space expansion plans will see it focusing on over 100 new Simply Food shops.
It won't necessarily mean that the retailer will be exiting towns in which it's had a store for many years, but that store will have a different focus and may be in a location such as an out-of-town retail park rather than on a high street.
It’s clear that this will reduce the amount of space dedicated to fashion and interiors product, but at least the presence of a company branded food outlet does still mean that M&S wants to retain a presence in a wide range of markets across the UK. Importantly, that also means click & collect will be available in an M&S branded store in those towns it's semi-exiting.
This an understandable move given the acceleration it's seeing in its online business. The company was a relative latecomer to a deep dive into online, but its investment in this area in recent years seems to be paying off with it saying that online purchases are rising and account for half of its sales.
The company said the move comes in the face of a difficult economic backdrop and as its costs are rising.
The news about its stores strategy came as it made a presentation to investors and said that it had already planned to only operate 180 full-line shops by early 2028. But the new plan is an acceleration of the strategy and it now expects to complete it within three years. The company operates 247 such stores at the moment.
It's planning to get rid of "lower productivity" shops, which would result in the closure of 67 (net) larger stores with floor space for stores that sell clothing and home down by nearly a fifth.
CEO Stuart Machin said the strategy is “creating a fit for the future store estate, with shops in great locations…We’re seeing strong performances from our recently relocated stores and this gives us the confidence to go faster in our rotation plans, whilst at the same time investing in bigger and better food stores.”
Machin added that the cost-of-living crisis is a headwind for the business with rising energy costs, higher wages and higher prices for its goods across the board. Energy costs, for instance, are £40 million higher this year than the company had planned for with 80% of energy use at the business accounted for by its stores.
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