// M&S’s full year profit before tax slumps 21.2% o £403.1m, on back of sales decline of 1.9% to £10.1bn
// Profitability improved in M&S’s food business but profits dropped by more than 1/3 in its clothing & home arm
// M&S also told investors that it took a £52 million hit to profits due to coronavirus
Marks & Spencer has revealed a £1 billion plan of action to help it survive the coronavirus crisis after it saw overall full-year profits slump my more than a fifth.
The high street stalwart said profitability improved in its food business but profits dropped by more than a third in its clothing and home arm.
M&S also told investors that it took a £52 million hit to profits due to coronavirus, while it estimated that costs and stock writedowns related to the outbreak cost it £212.8 million.
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For the full-year period ending March 28, M&S’s profit before tax slumped by 21.2 per cent down to £403.1 million, which is below average estimates of around £415 million.
Meanwhile, statutory profit before tax fell 20.2 per cent year-on-year to £67.2 million, while profit after tax plummeted 39.5 per cent to £27.4 million.
The retailer said overall sales dipped 1.9 per cent year-on-year to £10.1 billion, while like-for-like food revenues in the same full-year period increased by 1.9 per cent.
M&S said that during the period it had acquired 50 per cent of Ocado Retail for an online grocery delivery partnership, and said the new tie-up delivered 40.4 per cent sales growth for the nine weeks to May 3.
Like-for-like revenue in M&S’s food business rose 1.9 per cent and operating profit 11.2 per cent, boosted by shoppers stockpiling in the early days of the coronavirus pandemic.
However, M&S’s struggling clothing and home division saw operating profit plunge 37 per cent year-on-year and like-for-like revenues dive 6.2 per cent as it was impacted by availability issues in the first half of the year.
On the other hand, M&S’s international revenue was down 2.5 per cent and operating profit slumped 15.2 per cent year-on-year to £110.7 million.
The retail giant said it will spend £1 billion on a plan of action to help it battle the coronavirus crisis, which also meant embracing a new way of working in a world that would “never be the same again”.
The plans included cuts of around £500 million in costs this year, and identifying savings in areas including marketing, logistics and recruitment.
M&S said the one-year business rates holiday from the government provided a £172 million benefit and it was drawing around £50 million from the government’s Job Retention Scheme.
M&S, which was relegated from the FTSE 100 last year, also warned the virus would impact trading for the rest of 2020 and no dividend payout would be made.
“Last year’s results reflect a year of substantial progress and change including the transformative investment in Ocado Retail, out-performance in food and some green shoots in clothing in the second half,” M&S chief executive Steve Rowe said.
“However, they now seem like ancient history as the trauma of the Covid crisis has galvanised our colleagues to secure the future of the business.
“Whilst some customer habits will return to normal, others have changed forever, the trend towards digital has been accelerated, and changes to the shape of the high street brought forward.
“Most importantly working habits have been transformed and we have discovered we can work in a faster, leaner, more effective way.
“I am determined to act now to capture this and deliver a renewed, more agile business in a world that will never be the same again.”