Marks & Spencer Sees Profit Drop 88% Due To COVID-19 Impact
Marks & Spencer has reported an 88% slump in full-year profit, as its clothing division was impacted heavily by the COVID-19 pandemic.
The British retailer, which also sells upmarket food, made a pretax profit before one-off items of £50.3 million (€58.1 million) in the year to April 3 versus analysts' average forecast of £43 million (€49.7 million). This was down from the £403.1 million it made in 2019-20.
“In a year like no other we have delivered a resilient trading performance, thanks in no small part to the extraordinary efforts of our colleagues," commented Steve Rowe, chief executive.
The group said it was unlikely to pay a dividend for the current year.
Marks & Spencer said like-for-like clothing and homeware sales dropped 31.5%, damaged by multiple coronavirus lockdowns which shuttered stores, while food sales on the same basis were up 1.3%. Food stores remained open during the crisis.
As a result it made a statutory loss of £201.2 million versus a profit of £67.2 million in 2019-20.
M&S said overall trading for the first six weeks of the 2021-22 financial year and since all stores reopened from lockdown has been ahead of the comparable period two years ago in 2019-20, and its central expectations.
It forecast underlying pretax profit to recover to £300 million to £350 million in 2021-22.
'As we recover balance sheet metrics consistent with investment grade, we will assess the reintroduction of dividend payments, although as we focus on restoring profitability this is unlikely in the current year,' the group said.
"With the right team in place to accelerate change in the trading businesses and build a trajectory for future growth, we now have a clear line of sight on the path to make M&S special again," Rowe added. "The transformation has moved to the next phase.”