Marks & Spencer chief executive Steve Rowe has set about his task of boosting the fortunes of the retailer with gusto, but the market got a first look at his turnaround costs and found them eye-watering.
The business booked £437.4m ($567.4m) of costs after property writedowns, as it reshapes its empire of just under 960 UK stores and around 460 international shops.
This pushed its annual pre-tax profit to tumble almost 64% to £176.4m in the 12 months to 1 April.
Rowe, who replaced former boss Marc Bolland in April, announced a five-year plan to close around 30 UK clothing and homeware shops and convert dozens more into food stores in November.
The retailer said in April it has began consultations to close six UK stores in Portsmouth, Slough, Warrington, Wokingham and two Simply Food stores in Monks Cross and Worksop. This would affect 380 staff, but the retailer has "guaranteed redeployment at a near-by store". The business is still reviewing its options for UK store closures.
Marks & Spencer also plans to withdraw from a further 53 stores in 10 loss-making international markets.
These markets consist of ten stores in China and seven in France, as well as all of its shops in Belgium, Estonia, Hungary, Lithuania, the Netherlands, Poland, Romania and Slovakia.
The group said these countries turned in losses of £34.7m last year on sales of £179.4m, and employ around 2,100 staff.
Closures on track
It said its plans in these markets are "on track" closing all of its shops in China in this financial year, and completing all of its staff consultations in the remaining markets.
Rowe's turnaround plans will also see it open 200 new Simply Food stores as it shifts away from disappointing fashion sales.
The business said last year it opened 68 Simply Food shops, with plans to open around 90 more stores this year.
Rowe said: "Last year we outlined a comprehensive plan to build strong foundations for the future. As we anticipated, the planned restructuring of M&S has come with a cost and has impacted profits, but the business is still strongly cash generative and we reduced our net debt. Looking ahead, we will continue our programme of self-help in a tough trading environment."
The retailer's shares opened almost 2% down, but by afternoon trading were 1.5% higher, indicating a cautious welcome from traders at Rowe's decisiveness.
Hargreaves Lansdown senior analyst Laith Khalaf said: "The new M&S boss Steve Rowe is pulling out all the stops to turn performance around, but restructuring the business comes at a cost, and that's why the company has posted a huge fall in profits."
Shore Capital analyst Clive Black added: "We view this performance as sobering. M&S is a medium to long-term change story with no quick fixes, as befits such organisations. At first base Rowe has done much, with points for encouragement therein."
Rowe has been bold this year, but investors will expect a healthy boost to profits next time round.