Marks & Spencer Group owned up to its mistakes, saying it needs to close more stores and catch up to rivals in e-commerce as Chairman Archie Norman tries to pull the UK retailer out of a crisis that has dragged on for more than a decade.
The shares rose as much as 6.6 percent early Wednesday in London, the most since July 2016, after the retailer said it’s accelerating a drive to become a “more commercial, more digital business.” A decline in sales of food and clothing in the fourth quarter underlined the need for a restructuring of the 134-year-old retailer, including plans to shut nearly one-third of its large stores in the UK.
“Marks & Spencer has admitted defeat on its recent strategy and the proposed revamp of a business whose brand may yet become its saving grace has been well received by investors,” Richard Hunter, head of markets at Interactive Investor, said in an emailed comment. Chief Executive Officer Steve Rowe acknowledged the company’s past missteps, saying M&S was slow to embrace e-commerce and to respond to a slump in foot traffic on the UK’s shopping streets. He asked for patience, saying the company envisions a return to “sustainable, profitable growth in three to five years.”
“There are a number of structural issues to address and we are taking steps towards fixing these,” Rowe said in a statement.
Under Norman, who became chairman last year, the fixture of the UK’s downtown shopping districts is lowering prices and upgrading its e-commerce infrastructure. But competitors are giving it new headaches, with J Sainsbury ’s $10 billion acquisition of Walmart’s Asda threatening to intensify price competition in clothing and food. Soaring costs and stagnant demand are squeezing all of the UK’s store-based fashion retailers.