Marks & Spencer Plc posted slightly better-than-expected profits for is third quarter and maintained its dividend payment Tuesday while revealing a £350 million group-wide restructuring plan.
The U.K. retailer said underlying profit before tax came in at £231.3 million for the three months ending in October, down 18.6% from the same period last year but marginally ahead of analysts' expectations of around £225 million. Group revenues, however, grew by around 0.9% year-on-year to just under $5 billion, the company said.
"In May, we laid out a number of questions which we would answer as part of our strategic review. We committed to creating a simpler business with customers at its heart, and taking action to start to recover our Clothing & Home business and continue to grow in Food," said CEO Steve Rowe. "
M&S said it will propose a franchise model for its international business and exit its loss-making "owned business" approach that it estimates will cost between £150 million to £200 million over the next 12 months.
It also unveiled a five-year plan that will "reposition" around 25% of its clothing and home space stores and increase the number of its Simply Food stores. The plan is estimated to cost around £50 million each year for the first three years and will likely mean the closure of around 60 "high street" stores.
The plans mean the company will not return cash to shareholders in the second half if its fiscal year "given costs of strategic change and uncertain market conditions".
Marks & Spencer shares were one of the more active trades in London Tuesday, rising as much as 1.7% in the opening minutes before paring gains and falling 1.75% by 10:15 GMT to change hand as 342.46 pence each. Year-to-date, the stock has fallen by more than 23%.