28th Apr 2020 09:51
(Alliance News) - Retailer Marks & Spencer Group PLC on Tuesday cancelled its dividend payment and said that it is planning for a "materially subdued" trading for the remainder of 2020.
The FTSE 250-listed company said the scrapping of its dividend for the financial year ending March 31, 2021, will save GBP210 million.
M&S already said last month it doesn't expect to pay a final dividend for financial 2020. The retailer paid an interim dividend of 3.9p, down 40% from a year ago. The dividend rebasing had been announced back in February 2019.
M&S has secured eligibility to access the UK government's Covid Corporate Financing Facility. It also has reached an agreement with lenders of its GBP1.1 billion revolving credit facility to substantially relax or remove covenant tests arising in September, March 2021, and September 2021.
"The agreement with the banks combined with other measures we have taken means that under our base planning scenarios and even more adverse assumptions, the business would have significant undrawn credit available for the 18 months ahead," the company said Tuesday.
M&S is planning for its Clothing & Home business to be severely constrained during UK lockdown and highly uncertain trading conditions in a prolonged exit period.
The company's Food business also has been hurt from the closure of cafes and slowdown in travel and of some city centre locations.
M&S intends to provide an update to its cost-savings measures along with its financial 2020 results on May 20. The company said last month it expects pretax profit to be at the bottom end of its GBP440 million to GBP460 million guidance range due to "very depressed trading in Clothing & Home".
"The crisis has created a very different way of working and rapid learning for the business at all levels. At the time of the results presentation we will also outline measures being taken to accelerate the transformation programme and change ways of working permanently under our "never the same again" programme currently being prepared for implementation," the retail chain said.
Shares in M&S were down 0.3% at 94.10 pence each in London on Tuesday morning.
By Tapan Panchal; [email protected]
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