Marks and Spencer Group PLC sounded the alarm as it said market conditions would become "more challenging" in the next financial year thanks to the cost-of-living squeeze and rising business expenses.
“All parts of the retail sector will be affected, and this will result in unviable capacity leaving the industry, creating opportunities for the leaner players who remain,” the retailer warned as it posted first-half results.
“We believe that the M&S positioning and the accelerated change underway, give scope for greater resilience and we are very confident the business will emerge with a strengthened market position and prospects for growth.”
The company used a recent capital markets day to outline plans to streamline its store programme in the hope of delivering an annual £300mln of cost savings.
The interim numbers, meanwhile, revealed further signs of revitalisation for the core clothing and home operation.
However, adjusted profit from the food business slumped 42% to £71.8mln in the six months ended 1 October 2022 as it struggled with cost inflation and was forced to compete on pricing with the mainstream supermarket groups.
Profit before tax for the entire group came in at £205.5mln, which while marginally ahead of City expectations, represented a 24% year-on-year drop. That said, the year-earlier figure was flattered by Covid-related business rates relief.
Clothing and home, a thorn in the side of the Marks business for most of the past 20 years, posted a 14% sales increase, while food was up 5.6% on a like-for-like basis.
Marks gave a rather oddly worded assessment of near-term prospects (the remainder of the 2022/23 financial year) as it said it expected to deliver adjusted profits of the quantum set out at the time of the last full-year results.