M&S suffers £52m hit from virus

MARKS & Spencer saw profits stumble for the past year after taking a £52 million hit due to coronavirus.

The retailer revealed that total profits dived by 21% to £403.1 million after it was dragged down by its troubled clothing business.

It came as the company told investors it had “hibernated” around £200 million of unsold stock in warehouses for spring 2021.

Sales of clothing and home products plummeted after stores were shut following the outbreak.

M&S said it expects a 70% drop in UK clothing and home revenues over the four months to July, before a gradual recovery.

However, it predicted annual revenues for the current year will fall by £1.5 billion as a result.

It expects food sales – impacted by lower sales and closures at travel locations – to fall by 20% in the period to July before levelling out, with a £400 million impact on annual revenue.

Chief executive Steve Rowe said the company is moving forward with around £1 billion of actions – including around £500 million of planned cost reductions – to mitigate the impact of the outbreak.

He also hailed the company’s progress ahead of the launch of its joint venture with Ocado in September to deliver products to customers.

He revealed that, alongside its core food products, the company will also sell a range of clothing and home products on the platform.

The retailer said profitability improved in its food business during the year to March but profits dropped by more than one third in its clothing and home arm.