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M&S lifted by store closure reports
Shares in Marks & Spencer rose on Monday on news that the high street retailer will more aggressively restructure its store estate.
The company could go as far as closing 40 of its larger stores, which offer clothing and food, after already announcing the closure of up to 14 stores in January, according to reports over the weekend.
The confirmed 14 closures put 468 jobs at risk, while the upcoming September closure of a distribution centre has placed a further 450 jobs in the firing line. The closures are part of a restructuring strategy announced 18 months ago to reduce shop floor space for the retailer's clothing division.
Some 20 of the 100 targeted stores have now been closed, affecting approximately 900 jobs, and it seems that this may only be a taste of things to come.
The Sunday Times said 40 more stores had been added to the list, while The Guardian said 100 stores were on the block.
Chris Beauchamp, chief market analyst at IG Group, said: "M&S remains in the throes of a turnaround strategy, as it looks to make its long-underperforming clothing division more competitive."
"Continued expansion for its food division has helped to keep revenue moving higher at this part of the business, but its move into online is taking longer than thought, while its competition from other stores in the mid-price part of the spectrum limits performance. Margin improvements are crucial, but this is a longer-term process, however continued store closures will help reduce some fixed costs," said Beauchamp.
M&S is expected to report a second year of falling profits with analysts projecting pretax profits of £573m, down 7% from the previous year, while clothing and home sales are seen as falling 1.1%.
Good results from the retailer could avert a potential demotion from the FTSE 100 index, with the company in the 'relegation zone' ahead of June's quarterly reshuffle.
In the company's last investor update six months ago, chairman Archie Norman said the company had been "drifting" for over 15 years and promised to accelerate in-store changes.
As of 1417 BST, Marks & Spencer's share price was up 2.26% at 298.30p.