Shares in clothing and food retailer Marks & Spencer (MKS) were marked up 4% to 89.2p on Wednesday as the British high street institution accelerated its ‘Never the Same Again’ turnaround plan to cope with the fallout from the coronavirus crisis.

Optimists peered past a 21.2% fall in annual profit, after clothing sales were crimped in the latter part of the financial year to March 2020, to focus on the £1bn Marks & Spencer reckons it can free up through cost savings and cash management.

Having tested the business against some challenging metrics, Marks & Spencer insisted it has ‘significant liquidity headroom’ throughout the next 18 months.

The hard-pressed retailer added that in the first 6 weeks of the new financial year, sales and cash had ‘substantially outperformed’ its gloomy COVID-19 scenario, with the combined impact of lockdown, social distancing and depressed demand likely to continue through the year.


Results for the year ended 28 March revealed a 21.2% slump in adjusted pre-tax profit to £403.1m, including an adverse earnings hit from COVID-19 in March. Revenue fell 1.9% to £10.18bn and Marks & Spencer had already announced that it was scrapping its final dividend.

Whereas like-for-like food revenue grew 1.9%, like-for-like clothing revenue dropped 6.2% in a dire year for the business.

Steve Rowe, chief executive, explained ‘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.’


Hoping the acquisition of a 50% stake in Ocado’s (OCDO) online grocery business will buoy food sales going forward - lockdown beneficiary Ocado Retail delivered 40.4% revenue growth for the 9 weeks to 3 May - Rowe added: ‘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.’


Shore Capital said it was ‘very encouraged by the agility Marks & Spencer has displayed in recent times, the work on liquidity, which gives the group breathing space to take the business forward and, most of all, the additional focus and pace to deliver transformation.

‘What sort of UK high street emerges from the coronavirus crisis remains to be seen but, like Next (NXT) and Primark, we see Marks & Spencer as a survivor and one that can be demonstrably leaner, fitter, quicker and so better. Challenging waters remain to be navigated, but we look at Marks & Spencer today with more positivity and conviction than we have had for some time and suggest investors consider a fresh look too.’

Russ Mould, investment director at AJ Bell, commented: ‘Seemingly forever stuck in turnaround mode, the latest results from Marks & Spencer provide a few interesting snippets about the business.

‘Its food business is more profitable than its clothing arm, a reflection of how it has cracked the proposition for the former and continues to disappoint with the latter.

‘It is going to sell core clothing items via its Ocado online grocery joint venture, meaning customers will be able to get pants and socks with their Percy Pigs sweets and avocados. That makes perfect sense and it should be an easy win for Marks & Spencer, particularly as margins are likely to be much higher on clothes.

‘If fewer people are visiting its stores for clothing essentials, this is a chance to cross-sell items with little effort as people go through the checkout process for their online food shop.’


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Issue Date: 20 May 2020