Marks & Spencer outperforming worst-case fears

LONDON: Marks & Spencer Group Plc (M&S) said it’s outperforming its worst-case coronavirus scenario in a positive sign for a United Kingdom retailer that’s going through the latest of a series of turnaround programmes.

When the outbreak spread to the UK, M&S said it anticipated that clothing and home sales would fall by 70% in the four months through July, with its food business declining by 20%.

Declines so far have been more modest overall, the company said, as business has been helped by efforts to drive sales online and at food stores that remain open during the lockdown.

The shares rose as much as 6.7% early Wednesday in London.

M&S reacted quickly to the pandemic, canceling about £100mil (Us$122mil) of clothing and home orders.

It scrapped its 2019 dividend and is unlikely to pay one in the current year while its lenders have relaxed covenant conditions on its main lending facility.

M&S has been trying to turn around for at least the last decade.

The strategy launched in 2016 aimed to close about 100 stores, generate more than a third of its revenue online, and double its food business within five years.

Last year it bought a 50% share of Ocado Group Plc’s UK online grocery business for £750mil.

M&S said a plan for its food products to replace those sold by the Waitrose chain from September is on track.

While clothing and home sales fell 75% in the six weeks through May 9, the company said, food sales were down only 8.8%.

Adjusted pretax profit for the year through March was £403.1mil, below analysts’ consensus estimate of £415.3mil.