M&S braced for fresh decline in profits as store closures continue
Marks & Spencer is set to report a sharp decline in profits for the full year as it looks to beef up its online offering amid a raft of store closures.
The high street stalwart is expected to post pre-tax profits of roughly £520m in its full-year results of Wednesday, a fall of 10 per cent on last year and the firm’s third successive year of decline.
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Analysts have forecast a 1.4 per cent dip in like-for-like clothing and home sales, while like-for-like food sales are expected to fall 2.4 per cent.
The struggling retailer has accelerated its ongoing restructuring plan, and has already closed almost half the 100 stores earmarked for closure by 2022.
But M&S will be hoping it can renew investor confidence as it lays out plans to revamp its online offering, most notably in its food division.
Chief executive Steve Rowe has already unveiled plans to shrug off the chain’s reputation as a so-called small basket retailer as it looks to win business from customers carrying out their weekly food shop.
Earlier this year M&S secured a £750m deal to buy half of Ocado’s retail business, staking its claim in the online grocery sector at the expense of rival Waitrose.
Investors will this week be hoping for more details about a planned £600m rights issue, which will fund the Ocado purchase alongside a previously-announced dividend cut of roughly 40 per cent.
Russ Mould, investment director at AJ Bell, said the fall in pre-tax profit was “going to be messy”.
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“Shares are trading very close to their financial crisis lows of 2008 although for all of that, they are only down by four per cent over the past year, which is better than the FTSE 100’s six per cent drop,” he added.
But M&S bosses remain confident the Ocado deal and a shift to online sales can help drive a transformation for the 135-year-old chain.