Marks & Spencer was stung with a £13.1m net charge last year in its UK logistics operation as it pushed ahead with the restructure of its Clothing & Home distribution network to a single-tier format.
In its full-year results for the year ended 31 March, distribution woes and supply chain restructuring played their part in the retailer’s 62.1% pre-tax profit slump from £176.4m in 2017 to £66.8m.
In its results, the retailer said its supply chains in both Food and Clothing & Home divisions required “significant upgrades” to enable goods to reach market faster, reduce high stock levels and improve food availability and waste.
It added that although its online sales were growing, its capability was trailing behind competitors and its website too slow: “Our fulfilment centre at Castle Donington has struggled to cope with peak demand and some of our systems are dated.”
M&S said it would be improving its website and investing to improve and increase capacity at Castle Donington to support its ambition to double its online share of Clothing & Home to 33%.
It will also be building a new South-East retail DC at Welham Green, which will be run by operator DHL Supply Chain.
Dedicated teams have also been set up across each business division to address supply chain issues and drive down costs.
UK Distribution and Warehousing operating costs for the year ended 31 March, on a like-for-like basis excluding restructure costs, saw an increase of 3.5% to £538m (2017: £519.6m). M&S said this was largely driven by “inflation, volume and the costs of channel shift”.
It added that in Clothing & Home, it delivered improved costs per single as it increased utilisation of its Bradford warehouse.
Supply chain capital expenditure also reduced £10.2m year-on-year from £34m in the year ended 1 April 2017 to £23.8m in its latest financial period, which M&S said reflected the completion of larger projects such as its Bradford DC the prior year.
Marks & Spencer CEO Steve Rowe said: “The first phase of our transformation plan, restoring the basics, is now well under way and the actions taken have increased the velocity of change running through our business. These changes come with short term costs which are reflected in today’s results."
As part of its transformation, the retailer will also be closing down 100 stores by 2022, of which 21 have already been shut.
M&S last month announced the closure of its Hardwick Grange, Warrington DC, with plans also underway to shut its Neasdon, north London site.
