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Marks & Spencer may close more stores than planned, CEO says
[LONDON] Marks & Spencer Group Plc said it may step up store closings as the troubled UK retailer reported another decline in sales.
After announcing plans in May to shut about 100 of its large stores selling food and clothing, Chief Executive Officer Steve Rowe said Wednesday that the number is only a "first stage" in the company's turnaround plan.
"It's what we see at this stage," Mr Rowe said in a meeting with analysts. "My gut says that's not the end."
The shares fell as much as 4.8 per cent as M&S reported comparable sales declines in each of its main business areas. Food, long a driver of growth at the fixture of the UK's shopping districts, has joined clothing in the doldrums, prompting a reboot spearheaded by Mr Rowe and Chairman Archie Norman. Despite the tumbling sales, profit beat expectations in the first half as a result of the cost cuts.
Additional closings would increase the number of vacancies in UK downtowns and shopping malls, as department-store chains like House of Fraser and Debenhams Plc shut outlets and specialized retailers like electronics seller Maplin go bust. Like other bricks-and-mortar retailers, M&S has struggled with the rise of Amazon.com Inc and other online retailers.
Some merchants are also using the UK's retail gloom to negotiate lower rents with property owners.
"It's a different dialogue now with landlords," Mr Norman said. "Nothing's forever anymore."