Primark set to overtake Marks and Spencer market share

Toby Melville  Reuters

Toby Melville Reuters

The retailer had a total of 1,035 United Kingdom stores at the end of its 2017/2018 financial year. It had meant to open 40 stores this financial year, but has cut that number to 25.

The high street chain's pre-tax profits have plunged 62.1 per cent to £66.8 million after £514.1 million of exceptional charges, including £321.1 million linked to its store closure programme. Is now well under way and the actions taken have increased the velocity of change running through our business.

"For investors a dividend yield of over 6% is an attractive stopgap, but at the moment Steve Rowe's promise to make M&S special again requires a leap of faith", said Laith Khalaf, senior analyst at Hargreaves Lansdown.

However, the M&S boss highlighted that these changes come with costs, which were reflected in Wednesday's results.

Prior to Wednesday's update, analysts were on average forecasting an underlying pretax profit of 555 million pounds for 2018-19, which would be a third straight year of decline.

"In the past year traditional retailers like Marks have faced a ideal storm of rising costs, a constrained consumer, and the relentless growth of online competition".

The shares were up 2.02pc at 297.7p mid-morning.

Group revenue, however, rose 0.7 per cent rise year-on-year from £10.62 billion to £10.69 billion and total sales in its food division were up 3.9 per cent.

"Our fulfilment centre at Castle Donington has struggled to cope with peak demand and some of our systems are dated", it said.

Shares in M&S have fallen 26% over the a year ago and the firm is in danger of being booted out of the FTSE 100 index.

The company is looking to improve its website, as well as investing to increase and improve e-commerce capacity, to support its ambition of doubling the online share of its Clothing & Home sales to over 33%.

M&S has launched a series of turnaround plans since the financial crisis - with clothing and home consistently dragging.

"There are a number of structural issues to address and we are taking steps towards fixing these", added Rowe.

The company said it expects to reduce floor space for clothing and home by 5% in 2019 while the space dedicated to food will be broadly level with the previous year.

"And we're concentrating on tackling the culture of the business, making M&S a faster, lower cost and more commercial digital business".

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