Marks & Spencer is braced for a financial hit of up to £300m from an expanded store closure programme that reflects brutal trading conditions on the British high street.
Sky News has learnt that the retailer will announce as part of its annual results on Wednesday a huge charge triggered by costs associated with its efforts to shrink underperforming parts of its store portfolio.
A source close to M&S said the company was expected to include so-called adjusted items worth approximately £500m in its 2017 results statement.
Of that sum, between £200m and £300m is related to the company’s plans to shut 100 UK shops by 2022 as well as a number of international outlets, a source said.
Those costs include charges related to leases, staff redundancy costs and provisions associated with future store closures.
Last year, M&S said UK and international closures and impairments resulted in £190m of charges, which were partly responsible for the retailer’s decline in annual profits.
Wednesday’s announcement is widely expected to herald the second consecutive fall, heaping pressure on Steve Rowe, M&S’s chief executive since 2016.
In an unscheduled update on Tuesday, M&S said that an additional 14 stores had been proposed for closure as part of its plans to realign its clothing and homewares space.
More than 600 employees face losing their jobs as a consequence of the decision, which the retail giant insisted was critical to its “wider five-year transformation plan to make M&S special again”.
It also said it would scale back the opening of new Simply Food-branded shops.
M&S has been under pressure for a decade to demonstrate to investors that it has a blueprint to compete with more technologically savvy rivals in both clothing and food, where sales have also begun to stutter during recent quarters.
It is far from alone in facing such travails.
Already in 2018, Toys R Us UK and Maplin have fallen into administration, while Carpetright, House of Fraser and New Look have tried to buy breathing space by unveiling rescue plans dependent upon the support of creditors.
Other retailers are likely to follow suit as they seek to cut costs and reduce unprofitable store space.
The company confirmed on Monday a Sky News report that Katie Bickerstaffe, the outgoing boss of Dixons Carphone in the UK, would join its board as new chairman Archie Norman seeks to bolster the retail expertise at its top table.
M&S declined to comment on Tuesday night.