Coronavirus: M&S expects profits at lower end of target range

In a trading update, M&S said it was continuing to monitor the effects of the coronavirus on trading and noted it had seen “substantial sales declines in clothing and home”, which would likely drive its final profit before tax number to or below the bottom end of its previous £440m-£460m range.

The retailer also warned of margins in clothing and home being “severely impacted” by unsold stock surpluses and probable promotional sales activity in the summer, and said it would therefore be “taking all possible steps to defer supply”.

Marks & Spencer said it had only benefited on a “small scale” from instances of food stockpiling seen by other grocers so far due to its “heavy bias to chilled and fresh”. However, it said the “significant shift to eating in home” should give a lift in sales.

It said that while there would “undoubtedly be supply interruptions”, these would not be “prolonged or financially material”.

Given the comparative strength of its food business, M&S said that it would be redeploying “significant numbers” of staff away from clothing and home to support those working in its grocery arm.

M&S welcomed the chancellor’s recent announcement with regards to business rates, but also laid out a number of steps it would be taking to “protect the longer-term trading potential” of the business and manage costs and cashflow.

It said it would postpone capital spending, manage its cost base, defer or cancel non-essential spending “at all levels”, reduce its supply pipeline by over £100m and seek to grow its online clothing business.