Shares in Marks & Spencer have plunged after an early rise, as investors weight up the implication of the retailer’s announcement to cut store numbers both at home and abroad.
M&S on Tuesday announced it is closing about 60 clothing and home stores over the next five years, in an effort to turn around its struggling business.
The changes mean 30 clothing outlets will shut completely in the UK, while a dozen more will be converted into food-only stores. M&S is also shutting 53 international stores in 10 overseas markets.
The company started the morning near the top of the FTSE 100, with shares up as much as 2 per cent before plunging by 3.51 per cent at 9 am.
At time of writing shares were still down 1.95 per cent.
The retailer also reporter a sharp drop in half-year profits with pre-tax profit dropping 88 per cent to £25.1 million, from £216 million in the same period a year ago, partly due to higher pension costs.
Russ Mould, investment director at AJ Bell, said: "Investors clearly want to see more than gimmicks like buybacks and special dividends if they are to show interest in a stock which is trading at May 1992 levels."
"Cost-cutting will help to support earnings forecasts but this will only take M&S so far. To truly revive profits the company must get Clothing & Home right and it is currently hard to argue that M&S has really found its fashion handwriting."
However, Neil Wilson at ETX Capital, said closing the foreign stores "makes sense".
He said: "[Chief executive Steve] Rowe wants to focus on Mrs M&S, the retailer's core customer, and this means doing its own version of Brexit by focusing solely on the UK market."
Freddie George, analyst at Cantor Fitzgerald, said new chief executive Steve Rowe’s strategy appears "sensible" but warned that it is unlikely to to lead to a "marked improvement in earnings over the medium term".
