Marks & Spencer has slashed capital expenditure by more than £400 million in the past year, it emerged last week – and the high street giant plans further cuts this year.
Capital spending figures in M&S’s annual report for the year to 29 March reflected the continued uncertainty in the UK’s retail market.
Following the likes of major retailers Tesco and Kingfisher, M&S slashed its construction spend – with reduced funds for new stores, refurbishments and maintenance. It also revealed it had “revised down capital expenditure in property for 2009/10” though it did not put a figure on how much it expected to spend.
The cuts came as the group announced a 40 per cent dive in profits, from more than £1 billion in 2007/08 to £604 million last year, as it felt the full force of the recession.
M&S’s total capital expenditure for 2008/09 was £652m, compared to £1.05 billion the year before.
The 125-year-old retailer last year slashed its modernisation programme by more than £300m alone – from £535m in 2007/08 to just £216m last year.
The money spent on new stores fell too, down from £203m to £150m.
And M&S cut its budget for maintenance in half. In 2007/08 it spent £106m, but last year it only spent £58m.
It did, however, step up investment in its supply chain and technology, which it said was “in line with our strategy to build an infrastructure fit to support the future growth of the business”. According to market intelligence unit Glenigan, M&S’s supply chain includes the likes of Wates, Bowmer & Kirkland, Bam Construct, Midas Group and ISG.
It also only slightly reduced its spend on construction projects abroad, with £40m of capital expenditure in its international division compared to £48m in 2007/08.
Despite the huge falls in expenditure, M&S increased its trading space by 5.6 per cent in the 12 months to March – equivalent to almost 60,000 sq m. This included the construction of a new flagship store at White City, built by Australian developer Westfield.
The group has a total of 668 stores, 75 of which were built last year.
The board said it would now be giving “stronger emphasis to extending larger stores and opening new stores in retail parks”.