LONDON, United Kingdom – British clothing-to-food retailer Marks & Spencer on Wednesday, May 20, announced a slump in annual profit as it booked a sizeable charge late on from the coronavirus outbreak and said it was slashing costs.
Net profit collapsed 49.5% to £27.4 million ($33 million, 30 million euros) in the 12 months to March 28 from a year earlier, M&S said in an earnings statement.
The group booked a £52-million charge in March, largely owing to COVID-19.
Annual revenue meanwhile dipped 2% to £10.2 billion.
M&S warned it expected sales to sink by about £2.1 billion in its current 2020-2021 financial year, with clothing and household items such as furniture hit the hardest.
The retailer added it had embarked upon a £1-billion cost-cutting plan to help combat fallout from the novel coronavirus pandemic.
“Whilst some customer habits will return to normal, others have changed forever,” chief executive Steve Rowe said.
“The trend towards digital has been accelerated,” he added, with M&S physical stores continuing to struggle.
“Coronavirus has accelerated the shift to online, and customer behavior has been changed forever,” said Hargreaves Lansdown equity analyst Sophie Lund-Yates.
“Marks & Spencer’s own digital transformation has been a long time coming, and it’s disappointing to hear that clothing & home [goods] sales have failed to pick up as expected online.”
The company’s share price was however up 4% in London trading on Wednesday.
The pandemic has “galvanized the company into a rethink of the entire business, scything through layers of unnecessary processes and costs in anticipation of how the consumer may shop on the other side of the current economic shock,” said Richard Hunter, head of markets at Interactive Investor. – Rappler.com
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