// Analysts say M&S will post a £59m pre-tax loss when it presents half-year trading update next week
// It’s thought that the pandemic and the lockdown period would have hit sales in its clothing & home department
// M&S forecast to post 0.3% growth in like-for-like food sales while like-for-like clothing & home sales expected to be 41% lower
Marks & Spencer is set to deliver a loss for the past six months as the Covid-19 pandemic weighed on clothing and home sales.
Investors are prepared for the retailer to reveal a knock from the pandemic but will be particularly keen for an update on its Never the Same Again turnaround scheme, which aims to accelerate M&S’s transformation into a more streamlined and digitally focused business.
In August, the retail giant said it would cut around 7000 jobs as part of a major restructuring plan.
- M&S drops clothing TV ad to focus on grocery this Christmas
- M&S creates 500 jobs amid digital-first Christmas strategy
- Christmas-related searches online up 80%, M&S says
In the same update, it said food sales had remained resilient in the face of the virus but lower clothing and home sales weighed on profitability.
A consensus of analysts has predicted M&S will deliver a £59 million pre-tax loss when it confirms its half-year trading performance on Wednesday next week.
The high street stalwart is expected to report 0.3 per cent growth in like-for-like food sales for the period, while like-for-like clothing and home sales are expected to be 41 per cent lower for the half after enforced store closures.
M&S reported a 1.1 per cent decline in food sales in the 19-week period to mid-August but said this was rapidly improving, with 2.5 per cent growth in the last eight weeks of this period.
Meanwhile, clothing and sales were also improving. It said sales for the department were 49.5 per cent lower for the 19-week period which included closures, but improved to a 29.9 per cent decline over the latter eight weeks.
Sophie Lund-Yates, equity analyst at Hargreaves Lansdown, predicts the retailer’s reliance on stronger food trading “hasn’t reversed” in recent months.
“The beat on trading in August has been driven by food, while clothing and home has really struggled,” she said.
“This dynamic was true before the pandemic, but a lacklustre online presence means this fault line has been exacerbated.”
Analysts at Barclays have said they expect a “decent profit” in the food business to be “offset by a sizeable loss in clothing and home”.
However, they also said the contribution from M&S’s joint venture with Ocado is expected to be better than previously predicted.
Shareholders will be keen to get an update on the progress of the £1.5 billion partnership, after Ocado switched to working with M&S from Waitrose at the start of September.
with PA Wires