M&S insists revamp plans on track despite massive Covid losses: more stores to shut

Marks & Spencer has fallen deep into the red after losses mounted amid the pandemic but insisted that its transformation plans remain on track including the closure of more stores.

The high street stalwart tumbled to a £201.2 million pre-tax loss for the 52 weeks to March 27 after its clothing and home business was particularly hammered by lockdown restrictions. It follows a £67.2m statutory profit in the previous year.

The group told investors that total revenues dropped after this slump offset an improvement in its food operations.

It reported that food like-for-like revenues increased by 1.3 per cent over the past year, but the company saw its clothing and home business report a 31.5 per cent slump despite 53.9 per cent online growth.

High street stalwart M&S said it was buoyed by its food business, which saw 6.9 per cent growth excluding its hospitality and franchise arms. Picture: Lisa Ferguson

The retailer said it is targeting 30 more closures in the “next phase” of its long-term transformation plan. It has already closed or relocated 59 stores but said it is accelerating changes to its portfolio of shops following the impact of the pandemic.The 30 planned closures will be part of a shake-up of around 110 stores, with the majority of these sites set for relocation.

Chief executive Steve Rowe said: “In a year like no other we have delivered a resilient trading performance.

“In addition, by going further and faster in our transformation through the Never the Same Again programme, we moved beyond fixing the basics to forge a reshaped M&S.

“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.”

Those makeover plans have involved the loss of thousands of jobs.

Freetrade analyst David Kimberley said there was “a long way to go” for the retail giant.

He noted: “Over the past four years, M&S managed to pay out somewhere in the region of six times earnings in dividends. Looking at today’s results you have to wonder what they were thinking.

“Even prior to the pandemic it was obvious the group needed to make some big changes and the adjustments to today’s income statement make clear just how costly those are going to be.

“It brings to mind the line from Danny in Withnail & I about holding on to a balloon for too long. M&S decided to delay the inevitable and hold on. Now they’re facing the consequences.

“The result is any shareholder expecting a dividend from M&S is going to be waiting quite a while before it arrives.”

Profit before tax and adjusting items came in at £41.6m, though that was far short of the £403.1m banked in the previous year.

Clothing and home operations saw a £129.4m operating loss, although M&S said the performance improved in the second half of the year.

These sales have also returned to growth since the reopening of all stores from the middle of last month, the group added.

John Moore, senior investment manager at Brewin Dolphin, said: “The loss reported in today’s results from M&S will likely be what grabs the headlines; but, away from that, a meaningful reduction in debt and the recognition that the company needs to manage and reimagine its physical estate are steps in the right direction."

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