Only a day after the final Woolworths stores closed down, Marks & Spencer have announced the closure of 25 of its Simply Food stores, and 2 regular M&S shops.

The closures will directly lead to 780 job losses, but the company also plans to cut 450 head office jobs on top of this.

M&S’ like-for-like sales fell 7.1% in the 13 weeks leading up to 27th December, and total UK sales fell by 3.4%, and it warned its profits may be lower this year due to reductions, especially in food.

Other High Street names feeling the heat are:
- Next, who suffered a 7% drop in sales in the six months leading up to Christmas.
- Debenhams, whose like-for-like sales fell 3.3% in the last twelve weeks.
- Blacks Leisure who recorded 3.9% decrease in like-for-like sales in thirteen weeks until January 8th.
Overall, M&S group sales fell by 1.2%, even though its international sales rose by 26.9%, and its online sales rose by 29%.

In closing stores and introducing a redundancy programme and cutting pensions, the company hopes to reduce annual running costs by over £175 million.

Its changes to pensions include a cap on the increase of money going into pension funds by just 1% per year, which will reduce the future build-up of pensions. Staff who started work before 1996, will also find their pensions reduced if they choose to retire early.

Sir Stuart Rose, M&S boss said: ‘We are aware that the proposed changes set out above will be difficult for those members of staff impacted, but given that we expect challenging economic conditions to continue for at least the next 12 months we believe we are taking the right action to maintain the strength of our business.’

Keith Bowman of stockbrokers Hargreaves Lansdown, warned that the difficulties M&S faced couldn’t be ignored: ‘Consumers globally are in retreat, the dividend payment is still under review and the group’s expansion into small food outlets is now in tatters.’

M&S say that the 23rd December was its record day for food sales, with sales of over £50 million. Also, it claimed that the clothing had done particularly well in sales of lingerie and children’s clothing.

Sir Stuart also says there are plenty of customers coming into the store, with 56 million walking through the doors in the 10 days leading up to Christmas.
He said that: ‘The volumes that we sold were greater than last year and the traffic we had in our stores was as much as last year. We’re just finding that customers individually didn’t have as much to spend.’

Though John Stevenson of the KBC said that the ‘cost initiatives are to be applauded,’ analysts are still predicting a fall in the company’s profits.
Mr Stevenson also predicts M&S profits to fall £595 million from last year’s £1 billion: ‘With the pressure on gross margin we’ve got, and given the sales outlook, we still expect profits to be falling next year.’