London: Marks & Spencer Group Plc plans to close around a third of its large UK stores over the next four years, as the retailer belatedly adapts to the rise of e-commerce.
M&S will close more than 100 stores that sell both clothing and food by 2022, the company said in a statement Tuesday. The London-based retailer intends to increase the proportion of online clothing sales to one-third, from about 18 per cent now. The shares fell as much as 2.9 per cent in London, giving back Monday’s gains.
“This will probably still leave them with too much store space,” according to Bloomberg Intelligence analyst Charles Allen. “M&S has to get its clothing-and-home stores down to a much smaller number unless they can demonstrate there is a real purpose to them.”
After years of putting off store closings, M&S is taking more drastic action to halt its loss of market share to online rivals and discounters under Chairman Archie Norman. J Sainsbury Plc’s $10 billion (Dh36.73 billion)| acquisition of Walmart Inc.’s Asda will create the UK’s largest retailer and intensify the pressure on M&S in clothing and food.
Online shopping accounts for 22 per cent of non-food retail sales in the UK, according to the British Retail Consortium. That shift is forcing merchants to operate from fewer, higher-quality locations. M&S said its remaining clothing and home stores will be larger and more oriented around technology. Fourteen stores will be closed in M&S’s current financial year and 21 have already been shut.
Read more: How Zara is modernising its stores
M&S also said it will open 15 fewer Simply Food outlets, which don’t sell clothing, this year. The retailer had planned to open 200 more food stores from 2017. Its food stores will double up as next-day order-collection points for clothing purchases, the retailer said. M&S has more than 1,000 stores, but nearly 700 of them sell food only.
M&S reports full-year results on Wednesday, with investors expecting more details on the extent to which investments in logistics will affect earnings.
Short selling — in which investors seek to profit from selling borrowed shares and later buying them back at a lower price — has spiked. Nearly 16 per cent of M&S’s shares are currently on loan, according to IHS Markit data. That’s the second-highest level of any company in the U.K.’s benchmark FTSE 100 index.