Its first loss in its 94 years as a publicly-listed company was reported by Marks & Spencer as the novel coronavirus pandemic severely hit its business.
A loss of £87.6m was reported by company in the six months to 26 September, compared to profits of £158.8m that the company had reported in the same period a year ago.
The performance of the company had been “much more robust than at first seemed possible”, said the company’s chief executive Steve Rowe.
An announcement to cut 7,000 jobs over three months was made by M&S in August.
Lower sale of clothing and home products primarily resulted in a 15.8 per cent slump in the sales for the six-month period across the group which came in at £4.09bn.
The company said that lockdowns and the desire for more casual clothes were responsible for the hit to its clothing sales in particular. For example, there was a 53 per4 cent drop in clothing sales in its city centre stores between July and September.
M&S however said in a statement that is expects an uptick in the demand for more formal clothes and occasion-wear in the near future.
“Marks and Spencer is committed to the High Street, but that comes at an enormous cost. Its 600 stores were closed [during lockdown], they’ve picked up on online and online sales are stronger than they’ve ever been. But that in no way covers the amount of sales loss they’ve covered this year,” said Catherine Shuttleworth, retail analyst and chief executive at retail marketing agency Savvy.
“You’ve got to change to survive. While Marks was saying it, they weren’t necessarily doing it, but it has now changed the way they work even at a simple level.”
For its Ocado Retail joint venture, which began its delivery of M&S food at the start of September, the company reported strong growth. While the profitability at the partnership has improved, a 47.9 per cent jump in sales was reported by M&S.
In order to make the range of products available on the Ocado platform more attractive, over 750 new lines including in grocery and homecare has been created by M&S.
The partnership Ocado had been described as a very important move by the company to shift focus to online since it is among the very few big food retailers that do not have its own internet-based delivery service.
M&S “is already reaping the rewards of an excellent partnership with Ocado. Its food business could benefit from the forthcoming national lockdown [in England] as consumers look for high-quality meals as an alternative to going out,” said Julie Palmer, partner at Begbies Traynor.
“This could help it counter the effects of fewer people grabbing a sandwich while nipping out of the office for lunch,” she said.
In the first half of the current year, there has been strong performance in its grocery business, as the company reported a 2.7 per cent hike in its like-for-like sales, driven by substantial growth from its Simply Food stores.
(Adapted from BBC.com)