26th May 2021 09:43
(Alliance News) - Marks & Spencer Group PLC swung to an annual loss, it revealed on Wednesday, with its clothing and homewares arm continuing to be left behind by its more-success food business, but the retailer drew attention to progress on its revival plan and Ocado joint-venture.
M&S shares were 4.6% higher at 163.10 pence each in London on Wednesday morning.
Revenue in the financial year that ended April 3 fell 10% to GBP9.16 billion from GBP10.18 billion. The financial year had the benefit of an extra week, though its trading was severely hurt by the Covid-19 pandemic. M&S swung to a pretax loss of GBP209.4 million from a GBP67.2 million profit.
On a comparable 52-week basis, revenue in the UK Clothing & Home unit plunged 32% to GBP2.20 billion from GBP3.21 billion. The beleaguered division was a laggard even before the Covid-19 pandemic.
UK Food's revenue on a 52-week basis was down 0.6% to GBP5.99 billion from GBP6.03 billion, though with the benefit of the extra week, it improved 1.8% to GBP6.14 billion.
M&S said that Ocado Retail, its joint venture with online grocer Ocado Group PLC, contributed GBP78.4 million in net profit during the year. Marks added that online revenue, minus Ocado Retail, stood at GBP1.5 billion.
"This has been an exceptional period for grocery online and Ocado Retail performed strongly. Higher than normal basket size and a smoothed trading proï¬le across the week together with reduced marketing costs delivered a strong improvement in profitability," M&S said.
"Our results for the year bear the impact of the pandemic spanning the beginning of the ï¬rst national lockdown through to near to the end of the third lockdown in the UK. However, they also reflect an acceleration of the transformation which enabled the business to deliver a resilient performance," the clothing, homewares and food retailer said.
M&S decided against an annual payout, after a 3.9p dividend last year.
"The board of directors continues to defer consideration of further dividends until visibility of the pace and scale of market recovery has improved," it said.
M&S said it received GBP306.1 million in UK government support during the pandemic, enabling it to maintain employment.
Trading in the first six weeks of the new financial year, and since reopening of high street stores in England, has been ahead of the comparable period two years ago and its central case, M&S said.
At this "early stage", the company expects to achieve profit before tax and adjusted items between GBP300 million and GBP350 million, which would be up sharply on GBP50.3 million reported for the recently ended year.
"In a year like no other we have delivered a resilient trading performance, thanks in no small part to the extraordinary efforts of our colleagues. In addition, by going further and faster in our transformation through the Never the Same Again programme, we moved beyond fixing the basics to forge a reshaped M&S," Chief Executive Officer Steve Rowe said.
Last week, M&S rejigged its management structure in the latest step of its transformation effort.
Katie Bickerstaffe and Stuart Machin will be promoted to the roles of co-chief operating officers. Bickerstaffe is currently the group's transformation chief, while Machin heads up its food unit. Machin continues as managing director of food. Chief Financial Officer Eoin Tonge will take on the role of strategy and transformation planning, as part of his CFO remit.
Rowe added on Wednesday: "With the right team in place to accelerate change in the trading businesses and build a trajectory for future growth, we now have a clear line of sight on the path to make M&S special again. The transformation has moved to the next phase."
By Eric Cunha; [email protected]
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