// M&S clothing & home division could see its sales slump by up to 90% across March & April
// In the 3 months to end of June, sales could fall up to 60%
// In Europe, sales may drop by 30% in first half of the year
Marks & Spencer is expected to face up to a 90 per cent drop in sales at its clothing & home division as the coronavirus outbreak takes its toll on the already-struggling retailer.
Wall Street analysts Goldman Sachs has forecast the sales slump for the retailer’s clothing arm in a devastating blow to the UK’s high streets.
The 60 per cent drop in sales is predicted in the three months to the end of June on the same period last year.
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Clothing sales in Europe is expected to fall by 30 per cent in the first half of this year, assuming a 90 per cent drop in sales for a four-week closure period across March and April.
On Friday, influential credit ratings agency Moody’s downgraded M&S’s credit rating as the outbreak was forecast to affect the retailer’s outlook in the weeks ahead.
Moody’s downgraded and placed on review for further downgrade M&S’s senior unsecured long-term ratings to Ba1, down from Baa3.
The retailer’s long term MTN Program rating was also downgraded from (P)Ba1 from (P)Baa3.
Moody’s said the rapid spread of the coronavirus and the deterioration of the global economic outlook has created a “severe and extensive credit shock across many sectors”.
The agency now expects demand within M&S’s Simply Food business to trade well, but its clothing & home business could endure a significant fall in sales in the weeks ahead.
Moody’s added that it expects the retailer’s profitability to fall “significantly” in its next fiscal year, to the end of March 2021.
Retail Gazette has approached M&S for comment.