M&S 'committed' to Ireland but will close stores elsewhere
Marks & Spencer has said it remains committed to the Irish market, following a sweeping review that will see it close many of its international, company-owned stores.
M&S chief executive Steve Rowe, who took over in April after succeeding Marc Bolland, is embarking on a plan that will see the retailer close company-owned stores in 10 countries.
It will close 53 company-owned outlets in Lithuania, France, China, Belgium, Poland, Estonia, the Netherlands, Romania, Slovakia, and Hungary.
But M&S said it remains committed to its company-owned stores in Ireland, Hong Kong and Czech Republic, as well as joint ventures in Greece and India. It has 17 stores in Ireland.
M&S also noted yesterday that it has reversed £4.2m of impairment charges that had previously been recognised in relation to five stores in Ireland.
"The reversal of the impairment charge reflects an updated view of the future cash flows from these stores, primarily due to reductions in cost of goods following the significant appreciation of the euro relative to sterling during the period," said M&S.
Apart from company-owned outlets outside the UK, M&S also has an international presence through 267 franchised outlets in 34 markets.
Delivering first-half results yesterday, M&S said that its company-owned international business made a £31.5m (€35.3m) loss between 2015 and 2016. Its international franchise business reported an £87m profit. Its total international operating profits in that period slumped almost 40pc to £55.8m (€62.6m).
It said the performance was "not sustainable".
"In the future, we propose to operate with fewer wholly-owned markets and have a greater focus on our established joint ventures and franchise partnerships," it added. M&S will also develop its franchised food business in France.
The international markets in which M&S plans to retain its company-owned stores, including Ireland, made a combined profit of £14m (€15.7m) in the last financial year, compared to the £45m (€50.52m) loss on revenue of £171m (€192m) that the ones being exited reported.
Alison Grainger, who heads Marks & Spencer's Irish business, said the company would continue to operate its profitable owned businesses in Ireland, "where there is strong brand awareness, an established store estate and loyal customer base".
The retailer will also continue a revamp and repositioning of its UK estate as it increasingly focuses on its food business.
The company reported an 18.6pc slide in its first-half underlying pre-tax profits, to £231.3m (€259.7m), as revenue edged just 0.9pc higher to £4.99bn (€5.6bn).
The profit decline was a result of lower home and clothing sales, which fell 5.3pc on a like-for-like basis in the 26 weeks to October 1.
But the underlying profit was nearly wiped out by £206.2m in non-underlying costs, including a £154.2m charge for closing its defined benefit pension scheme in the UK.