Marks and Spencer (M&S) has upgraded the opening target for its food stores as it concentrates on convenience as part of its “strategic focus”.
The news came with the announcement of pre-tax profit down 64% to £176.4m in the past financial year on group revenue up 0.6% to £10.62bn in the 52 weeks to 1 April from £10.56bn the previous year which included an extra week of trading.
New stores drove food revenue growth of 4.2% although cost inflation and higher-than-expected waste knocked gross margin down 25bps.
The 200 Simply Food store openings that the retailer previously announced would open by the end of 2018/19 has been upped to 250 by 2019/20.
The company said about 90-100 would open in each of the next two years, of which about a third would be with its franchise partners on forecourts, stations, airports and motorways.
It opened 68 new food stores during the past financial year, of which 39 were company owned, and added 1,600 new “innovative” food lines – equivalent to about a quarter of its total offer during the year.
Performance of new company-owned Simply Food stores was ahead of expectations, exceeding sales forecasts by 17% overall.
The strategic objectives in food remained consistent: “superior quality, leading innovation and offering convenient fresh food in convenient locations”, it said.
Aylesbury Foodhall, in Buckinghamshire, is scheduled to open today (Wednesday) and other forthcoming food stores include Bishopsgate, in the City, Huntingdon, in Cambridgeshire, Spinningfields, in central Manchester and Strood, in Kent.
M&S has 979 UK stores, of which 253 are company-owned Simply Foods and 383 are franchised food outlets.
The current financial year is expected to see about £400m of capital expenditure as it increases the rate of Simply Food store openings.
Steve Rowe, chief executive, said: “Last year we outlined a comprehensive plan to build strong foundations for the future.
“We said we would recover and grow clothing and home, continue with our plans for food growth, remove costs and simplify the business. We achieved a huge amount in the year and whilst there is still much to do. I am pleased with our progress and we remain on track.”
The restructuring of the business, however, had come with a cost and had hit profits but the business was still “strongly cash generative” and it reduced net debt by £293m to £1.9bn.
M&S confirmed it was continuing to analyse the online food market with a view to undertaking a potential soft trial in the autumn.