M&S remains upbeat after suffering first loss in 94 years as a public company: reaction
Marks & Spencer has suffered the first loss in its 94 years trading as a public listed company after clothing sales were hit hard by store closures amid lockdown.
The high street stalwart slumped to a £87.6 million pre-tax loss for the 26 weeks to September 26, compared with a £158.8m profit in the same period last year.
The group told shareholders it performed “better than expected” during the first half, with revenue falling less than initially predicted. Overall revenue for the period was down 15.8 per cent to £4.09 billion after the chain was hit by lower clothing and homeware sales.
The clothing and home division saw sales dive 40.8 per cent over the half-year, with a 21.3 per cent decline in the second quarter as it benefited from the reopening of stores and strong online sales growth.
M&S reported that trading in October “has continued at similar rates” to the second quarter, with clothing and home sales down 21.5 per cent but food sales up 3 per cent.
Its grocery business performed “strongly” over the half-year, with like-for-like sales up 2.7 per cent on the back of substantial growth from its Simply Food stores.
The trading update came as M&S continues to push forward with its “Never The Same Again” transformation programme. It said the initiative, which saw the group slash 7,000 jobs in August, will enable it to emerge from the crisis in a “stronger, leaner and more focused position”.
Chief executive Steve Rowe told investors: “In a year when it has become impossible to forecast with any degree of accuracy, our performance has been much more robust than at first seemed possible.
“This reflects the resilience of our business and the incredible efforts of my M&S colleagues, who have been quite simply outstanding.
“But out of adversity comes opportunity and, through our Never The Same Again programme, we have brought forward three years’ change in one to become a leaner, faster and more digital business.
“From launching M&S Food online with Ocado, to establishing an integrated online business division, ‘MS2’, to step-change growth, we are taking the right actions to come through the crisis stronger and set up to win in the new world.”
John Moore, senior investment manager at Brewin Dolphin, noted: “Despite the company’s historic loss, there are some encouraging signs in Marks & Spencer’s update.
“The initial success of the Ocado partnership is highly promising and appears to be unlocking the food business’s previously untapped online potential. Debt reduction and improving cashflow also provide some comfort, although the former remains high for a business in transition.”
Michael Hewson, chief market analyst at CMC Markets UK, said: “While most of the headlines are likely to be around the fact the company has slipped to a loss, the outlook for the business does seem a little brighter, with the Ocado deal a decent foundation for a recovery.
“Even with today’s numbers, this month’s [English] lockdown until December is yet another headwind for the sector, with no guarantee that physical stores will be able to reopen to take advantage of a pre-Christmas rush.”
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