HIGH street giant Marks & Spencer has announced that it will step up the rate at which it will close unprofitable stores at the same time as slowing the expansion of its Simply Food network as it unveiled a 5.3 per cent drop in profits at the half-year stage.

The business, which last year said it would close 30 UK stores and convert a further 45 into food-only shops, saw pre-tax profits decline from £231.3 million to £219.1m in the six months to the end of September despite turnover rising by 2.6 per cent to £5.1 billion.

During the period the business closed four shops that focused on clothing and homeware and reallocated space in 56 further shops from womanswear to what chief executive Steve Rowe called “areas of growth opportunity such as childrenswear and home”. It also opened 24 new Simply Food stores.

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While Mr Rowe said the business would now focus on accelerating its store-closure programme, he added that increased competition from other food retailers has made M&S rethink its plan to convert further clothing outlets into food-only ones.

“The headwinds facing our food business have intensified as competitors have encroached on some of our space with the rapid growth of convenience,” Mr Rowe said.

“Online home delivery is growing share.

“Hard-pressed consumers are more aware of value and are careful about premium choices.

“Therefore, although our investment returns remain high, we are slowing our Simply Food opening programme as we reposition our food offer for future growth.

“Only the highest-returning sites will qualify for addition to our store portfolio.”

In relation to the clothing and homeware side of the business, Mr Rowe said the growing importance of online sales had had an impact on the decision to speed up the rate of store closures.

“This, and the better than expected levels of sales transfer from recent closures, means that we are accelerating our UK store rationalisation programme, including closures, space reduction and relocations,” he said.

“Our intention is to reshape the estate to focus on high-volume locations with conforming store size and fit-for-purpose back of house facilities.

“We will prioritise a digital-first approach in our stores and in our central functions.”

In total the business estimates that the space covered by its food shops will have increased by five per cent by the end of 2017/18 while the space dedicated to clothing and homeware will have reduced by 1.5 per cent.

In addition to rationalising its UK cost-base through store closures, M&S has closed all 53 of its international outlets and introduced what Mr Rowe termed a “simplified approach” to pay and pensions.

In addition to closing its defined benefit pension scheme to future accruals, the company increased the hourly rate it pays its customer assistants at the same time as removing premium payments for working on Sundays and introducing a standard rate for working bank holidays.

As part of the changes M&S agreed to make transitional payments for a period of three years to all staff members that were transferred from its defined benefit pension, which has a surplus of £638.4m, to its money purchase scheme.

This transitional arrangement cost the business £6.7m in the first half of this year.

It also incurred a £26.5m charge in relation to consolidating its London headquarters into one building, something Mr Rowe said was “part of streamlining our UK cost base”.

Mr Rowe added: “The business still has many structural issues to tackle as we embark on the next five years of our transformation, in the context of a very challenging retail and consumer environment.

“Today we are accelerating our plans to build a business with sustainable, profitable growth, making M&S special again.”

M&S’s shares closed up by just over one per cent yesterday.