Marks & Spencer to axe dozens of high street stores in Rowe revamp

The new boss of Marks & Spencer (Other OTC: MAKSF - news) (M&S) is to axe dozens of UK stores and stop selling clothing in others in a radical shake-up of its high street presence aimed at persuading the City that he can revive the fortunes of Britain’s best-known retailer.

Sky News has learnt that Steve Rowe, who took the helm at M&S earlier this year, will announce next week that a substantial chunk of its UK store portfolio is to be reorganised, a move that will include the outright closure of a significant number of shops.

Sources said on Friday that the closures, which will take place over several years, would number "in the low dozens", while other stores will see space reallocated from clothing to its more successful food operations.

A number of other stores are expected to be relocated.

That will mean M&S's clothing range being sold in a substantially smaller number of shops, which one retail analyst described as "a seismic shift" for the company.

The closures and broader property reorganisation are likely to result in a significant one-off charge, insiders said.

Mr Rowe will announce his decisions as part of a wider strategy review aimed at convincing investors that he has a plan to transform M&S's recent lacklustre performance.

Since taking over from Marc Bolland in April, Mr Rowe has proposed axing more than 500 head office jobs in an attempt to exert a tighter grip on its cost-base.

International retrenchment will also feature in next week's presentation, with Bloomberg reporting this week that the M&S chief would signal an exit from some of its stores in China.

Mr Rowe, who joined the company as a Saturday boy in its Croydon store in the 1980s, is likely to shrink the number of stores selling clothing as intense competition from online rivals continues to hit the company's market share.

The spectre of looming inflation, which has prompted warnings from rivals including Next (Other OTC: NXGH - news) , and the weakness of sterling are also expected to be flagged by Mr Rowe as significant risks confronting M&S.

The retailer trades from just over 300 'full-line' stores in the UK, selling clothing, homewares and food.

M&S owns the freehold or very long leases on more than two-thirds of those shops.

It also owns more than 220 Simply Food stores, while a further 350 M&S food shops owned by franchisees.

Despite the closures of some of its high street stores, the overall number of M&S-branded outlets will increase, with another 200 Simply Food stores due to open by 2018-19 under previously announced plans.

In July, Mr Rowe announced the sharpest like-for-like decline in M&S's clothing business for more than a decade, with sales down nearly 9% in the 13 weeks to 2 July.

"These are not the numbers I wanted to see - not by any stretch," Mr Rowe said at the time.

Shares (Berlin: DI6.BE - news) in M&S have fallen by about one-third in the last year, giving the company a market value of just over £5.5bn.

A spokeswoman for M&S declined to comment.