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27 May 2014 | Will Green
Marks & Spencer (M&S) has pulled out of plans to build a £200 million distribution centre at London Gateway.
Announcing full year results for 2013/14, the company said it had revised its supply chain strategy and would no longer be investing in a 900,000 sq ft centre at the deepwater port.
Last year M&S said it would be creating a “single tier network” for its supply chain, reducing the number of distribution centres in the UK to three and using the London Gateway site to store clothing, homeware and gifts before they were transported to UK and international stores.
But in its latest results M&S said while two new national distribution centres (NDCs) had been built at Castle Donington and Bradford, the London Gateway site would not go ahead, saving it £130 million.
In a statement the firm said: “Following a thorough review of our plans, we have taken a decision not to proceed with the site at London Gateway and have developed an alternative plan. This will secure the delivery of the single tier network by 2016/17 as planned, by operating from the two new NDCs, at Castle Donington and Bradford, supported by four of the existing regional distribution centres which will be converted into NDC use. This will use our capital investment more efficiently, with a planned £130 million reduction in investment while largely retaining associated benefits.”
The retailer's results show group sales were up 2.7 per cent at £10.3 billion but underlying profit before tax fell 3.9 per cent to £623 million.
London Gateway, which opened in late 2013, said five new shipping lines had recently started operating and construction had begun on a “common user facility”, where firms will be able lease storage space.
A spokesman said: “We continue to be a port of choice for M&S and we will keep moving forward with them to support their business development objectives and reduce their supply costs.”
Hayley Bevis, senior associate and logistics specialist at law firm Thomas Eggar, said: “Marks & Spencer need to be sure that the savings made from the decision not to open in London Gateway will be put to good use and invested in other areas such as technological advances and improvement of e-commerce services to get ahead. As has been seen during the recession, it is those retailers with a significant and dynamic e-commerce presence, backed up with both a timely and informative delivery process, which will win the day.”