Marks & Spencer. Picture: REUTERS
Marks & Spencer. Picture: REUTERS

London — Britain’s Marks & Spencer (M&S) reported the first loss in its 94 years as a publicly listed company after clothing sales were hammered by the Covid-19 pandemic, but an encouraging performance in food sent its battered shares higher.

The stock was up 5% at 10.26am GMT on Wednesday, paring 2020 losses to 55%, as investors took comfort from the half-year loss not being as bad as feared, and from the initial success of a partnership with Ocado which has given M&S’s food business an online presence for the first time.

“Looking at the first half cold, it looks like a car crash but relative to expectations the print was OK,” said analysts at Peel Hunt.

M&S was struggling to re-invent itself after decades of failed attempts before the pandemic hit. In May, it said the crisis would indelibly change its business and it would accelerate the latest turnaround plan, delivering three years of change in one. In August, M&S cut 7,000 jobs.

M&S made a pre-tax loss before one-off items of £17.4m in the 26 weeks to September 26 — its first loss since joining the stock market in 1926.

The outcome was ahead of analysts’ average forecast of a £59m loss. M&S made a profit of £176m in the same period in 2019.

Clothing and homeware revenue slumped 40.8%, damaged by a three-month coronavirus lockdown in the spring. All clothing retailers have been hurt by the crisis. On Tuesday, Primark reported a 63% fall in annual profit and, last week, Next forecast a 50% decline.

M&S’s first-half food sales rose 2.7% on a like-for-like basis, with weak performances from stores in city centres and transport hubs because of the government’s work-from-home directive offset by a better showing from suburban stores.

CEO Steve Rowe said the September launch of the Ocado venture had gone “fantastically” with customer reaction ahead of expectations. And despite the loss he struck a confident tone, telling reporters: “We’re building an M&S that is fitter, faster and more digital, and is ready to emerge as a stronger, renewed business.”

In the first four weeks of M&S’s second half, food revenue was up 3%, clothing and homeware was down 21.5% and international revenue was up 7.4%. But M&S cautioned that England’s new four-week lockdown, starting on Thursday, would hit clothing and homeware sales and profit.


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