Marks & Spencer's annual profit slumps 88 percent as COVID-19 crushes clothing sales

Reuters

Posted at May 26 2021 04:11 PM

Marks & Spencer's annual profit slumps 88 percent as COVID-19 crushes clothing sales 1
A woman walks past a Marks & Spencer store at Oxford Street, amid the outbreak of the coronavirus disease (COVID-19), in London, Britain, July 20, 2020. Henry Nicholls, Reuters/File Photo

LONDON - British retailer Marks & Spencer on Wednesday reported an 88 percent slump in full-year profit, reflecting a collapse in clothing sales due to the COVID-19 pandemic and said it was unlikely to pay a dividend for the current year.

M&S, which also sells upmarket food, made a pretax profit before one-off items of 50.3 million pounds ($71.2 million) in the year to April 3 versus analysts' average forecast of 43 million pounds and down from the 403.1 million pounds made in 2019-20.

The 137-year old group, one of the best-known names in British retail, said like-for-like clothing and homeware sales plunged 31.5 percent, damaged by multiple coronavirus lockdowns which shuttered stores, while food sales on the same basis were up 1.3 percent. Food stores remained open during the crisis.

As a result, it made a statutory loss of 209.4 million pounds versus a profit of 67.2 million pounds 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 300-350 million pounds 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," it said. 

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