Marks & Spencer profits down 21%
Marks & Spencer has seen its full year pre-tax profit before one-off items decline by 21.2% to £403.1 million after costs and stock write downs relating to the covid-19 pandemic cost it £212.8 million.
In the year to 28 March, group revenue dropped by 1.9% to £10.18 billion. On a statutory basis, pre-tax profit fell by 20.2% to £67.2 million.
Revenue at the retailer’s food business climbed by 2.1% in the period as like-for-like sales rose by 1.9%. M&S attributed the uplifts to improvements made to its range, value and customer communications as well as the impact from the covid-19 pandemic.
Meanwhile, revenue in the retailer’s clothing and home business declined by 8.3%, with like-for-like sales falling by 6.2%, after first half trading was affected by availability issues in the womenswear category. The business also experienced problems during the retailer’s second half due to teething issues with moving menswear towards a more contemporary style and fit.
M&S said the covid-19 crisis began to have an impact on its business in the first week of March. In-store sales of clothing and home items were subsequently reduced to a trickle following the closure of space due to lockdown restrictions. Clothing sales fell by 16% year-on-year at the worst point of the crisis.
In contrast, the retailer’s standalone Simply Food stores have traded well due to many stores being situated in retail parks with direct access from car parks.
During the year, M&S completed the purchase of 50% of Ocado Retail to enable it to provide customers with an online grocery delivery service from this September.
Steve Rowe, Marks & Spencer chief executive said: “Last year’s results reflect a year of substantial progress and change including the transformative investment in Ocado Retail, outperformance in food and some green shoots in clothing in the second half. However, they now seem like ancient history as the trauma of the covid crisis has galvanised our colleagues to secure the future of the business.
“Whilst some customer habits will return to normal others have changed forever, the trend towards digital has been accelerated, and changes to the shape of the high street brought forward. Most importantly working habits have been transformed and we have discovered we can work in a faster, leaner, more effective way. I am determined to act now to capture this and deliver a renewed, more agile business in a world that will never be the same again.”
Photo by Georgia Hawkins
