M&S to focus on food and drinks

M&S is overhauling its estate, boosting the number of its Simply Food outlets, which include its award-winning wine aisles, by 200 in the next two years, while cutting back on its loss-making clothing outlets.

Marks and Spencer
The announcement was made as part of the retailer half-year results, which showed flat group revenues of 0.9%, and profits before tax down 18.6% to £231.3 million in the 26 weeks to 1 October 2016.

Overall, the number of stores will increase, CEO Steve Rowe said, although around 25% of the space now devoted to clothes and home will be “repositioned”  with around 60 fewer clothing and home chopped from the estate. In concentrating on trading from “fewer, better locations”, 45 clothes and homeware stores will be converted to Simply Food, and a further 30 will be closed.

Rowe said it was a tough decision but vital to build a future M&S that was “simpler, more relevant, multi-channel and focused on delivering sustainable returns”.

“At the end of five years, we will operate from fewer, better Clothing & Home stores, but from substantially more Simply Food stores,” he added.

Around 21 new food stores have already been opened, and performance was 17% higher than originally forecast, he noted. M&S Food grew 4+% overall, with like for likes down 0.9%, helping to off-set the 5.3% decline in clothing and home, even though Rowe argued it showed signs of recovery.

“Our aim is to build a sustainable business which will delight our customers, provide a robust foundation for future growth and deliver value for our shareholders in the long term. We have made good progress on our plans and customers are already noticing a difference, particularly in Clothing & Home,” he said.

Around 525 jobs will be cut at head office as part of ongoing cost cutting, with a further 400 to go in London, and internationally, the retailer will concentrate on its franchises business, closing down all of its wholly-owned stores, including seven in France, ten in China and others across the EU.

Wine focus

Speaking at its annual tasting in mid-September, BWS Trading Manager Garry Brooking had said the year had been a successful one in BWS. He has previously pointed out the success of the new Wine Shop formats that have been rolled into around 20 stores, and which is expected to rise by another 40 by the end of the financial year. “It is a fantastic new look and feel in our stores, aimed at bringing to life our wine credentials,” he told db.

The retailer has also significantly grown its beer range over the last 18 months and was set to accelerate its fine wine parcel system after a “fantastic response”. It has recently revamped its range of Bordeaux and extended its range of Eastern Mediterranean  wines with wine from Crete and Cyprus, and South Africa, as well as adding a new range of branded Champagnes and gins in store for Christmas, including a dill and spice and pink grapefruit gin. Innovation for Christmas includes the introduction of a smooth Flat White Porter and its first ever sake.

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