M&S is braced for tumbling profits with boss Steve Rowe set to announce raft of store closures

 
Rebecca Smith
The high street stalwart is poised to deliver a gloomy outlook
The high street stalwart is poised to deliver a gloomy outlook (Source: Getty)

Marks & Spencer is braced to unveil tumbling profits in its interim results on Tuesday.

Profit before tax is expected to have dropped by over 20 per cent to £216m according to analyst consensus, showing the scale of the challenge chief executive Steve Rowe faces.

Clothing and home sales, which are measured at stores open for at least a year, are expected to have declined by as much as five per cent. Santander predicted a four per cent like-for-like drop in clothing and home.

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It's forecasting £180m in full-year exceptional costs.

M&S has often been able to point to its booming food business when clothes sales are lacklustre, but it doesn't look as if it'll be able to fall back on that for this update: food sales on the same basis are expected to be flat.

Clothing and homeware sales account for 48 per cent of the business, while food accounts for 52 per cent. M&S had revenues of £10.4bn and pre-tax profit of £684m last year.

All eyes will be on what Rowe unveils as stage two of M&S' strategic plan, after the first, revealed back in May, looked at the UK retail business and reestablishing style authority and price positioning.

He previously said sales in clothing had been "unsatisfactory for a number of years" and pledged to focus on a number of key problems, including ditching fashion trends in favour of "accessible products [our customers] can wear with confidence".

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It's expected that Rowe will announce a significant reordering of the company in the UK this week, with a number of store closures. There'll be around 30 of its 940 UK stores closing, as well as trimming of its international portfolio across the likes of France and China.

There will also be a reorganisation to focus on the brand's more successful food business. It'll be a markedly different approach to that of Rowe's predecessor, Marc Bolland, who expanded the business abroad.

M&S' international profits fell 37 per cent last year, while the future of the firm in Europe has become uncertain after the Brexit vote. The business has 480 stores across Europe, Asia and the Middle East.

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