Marks & Spencer chair to shareholders: 'We're on a burning platform'

The chair of M&S has warned of the existential threat faced by the hight street giant. Photograph: Jack Taylor/Getty Images

The chairman of Marks & Spencer has given his starkest warning yet about existential threat faced by the high street giant as he refused to rule out further store closures and job losses.

“This business is on a burning platform,” said Archie Norman, who took over as M&S’s chairman last year. “We don’t have a God-given right to exist and unless we change and develop this company the way we want to, in decades to come there will be no M&S.”

Norman’s language echoed that of Nokia chief executive Stephen Elop in 2011, when the mobile phone firm was facing annihilation by smartphones. He said the retailer is in the first phase of a five-year turnaround that involves first getting the company to acknowledge the serial management failings that have resulted in years of falling clothing sales and declining profits.

In May M&S reported a 62% fall in annual profits to £66.8m after a £514.1m bill for restructuring that included £321m to pay for the first phase of a programme to close 100 stores. Norman told the annual shareholder meeting that unlike its arch rival, Next, M&S had not been as ruthless at closing older stores as shopping habits changed. A shareholder asked for reassurance that there would no further job losses but did not receive it.

“We have old stores in locations where people are not spending anymore and it’s a drag on our performance,” Norman said. “We are grasping a nettle that should have been grasped many, many years ago. We have said it’s going to be 100 stores but I can’t tell you that it’s going to end there. We have got to get to the point where we have a modern estate and we have to go through the pain barrier to get there.”

M&S is the official tailor of the England football team and purveyor of Gareth Southgate’s now legendary waistcoat Photograph: Ozan Kose/AFP/Getty Images

Norman’s comments came as Poundworld, the discount retailer that went into administration last month, said 25 shops would shut by the weekend, with the loss of nearly 250 jobs. The closures come after administrators at Deloitte failed to find a buyer for the whole business, which employs more than 5,000 people in 335 stores across the UK.

Poundworld is one of a string of retailers and restaurant chains that have collapsed or shrunk against a backdrop of higher costs and the consumer spending squeeze that is also making life difficult for M&S.

Steve Rowe, M&S’s chief executive of two years, said: “It was not a great year. We exceeded the expectations of the City but didn’t do so in a way I can be pleased or proud of.”

Rowe was particularly critical of its web operation. The pages on its website still take 50% longer to load than its slickest rivals despite a £150m revamp while its purpose built warehouse in Castle Donington, Leicestershire could not support its stated ambition to have 30% of its clothing sales online in five years time. “We are not digital in an age where most retail starts with a mobile phone,” said Rowe.

A rare bright spot amid the gloom was the success of M&S’s longstanding role as the official tailor of the England football team and purveyor of Gareth Southgate’s now legendary waistcoat, which has become a social media sensation.

“We’re proud to be supporting England and the boys as they progress through the World Cup,” Rowe said. “I finish here because of the relevance of the transformation of the England football team and the hard work that’s gone into changing something we didn’t rate … we are committed to continue the transformation of your business and to make M&S special again.”