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(Alliance News) - Marks & Spencer PLC on Wednesday reported a swing to loss for the first half of its financial year, as the Covid-19 pandemic caused its Clothing & Home segment to weigh heavily on performance.
However, the FTSE 250 food, clothing and homewares retailer considered its performance to be better than expected.
For the six months ended September 26, Marks & Spencer's revenue declined by 16% to GBP4.09 billion from GBP4.86 billion the year before, reflecting an outperformance over the Covid-19 planning scenario of a 23% fall.
As a result of this, M&S was able to generate free cashflow and exit the period with reduced stock levels, it said.
However, the fall in revenue still led to a pretax loss of GBP87.6 million, compared to a profit of GBP158.8 million a year before. Pretax loss before adjusting items was GBP17.4 million, swinging from a profit of GBP176.3 million in the prior year.
M&S booked GBP70.2 million in adjusting items for the period, which includes GBP92.1 million related to restructuring activities as part of the "Never the Same Again" programme, and a gain of GBP49.1 million, relating to the sell-through of Clothing & Home stock.
Like-for-like sales growth in the Food unit was 2.7%; however Clothing & Home like-for-like sales plunged by 39% due to stores being closed during the spring lockdown in the UK.
Over the first half, M&S did note an improvement in the Clothing & Home segment, with revenue declining by 62% in the first quarter, but by only 21% in the second.
M&S declared no dividend for the period, compared to a 3.9 pence per share payout the year before.
Looking ahead, trading in the first four weeks of the second half is said to have continued at similar rates since the end of the second quarter, with Food revenue up 3.0%, and Clothing & Home revenue down by 22%.
Considering the upcoming second lockdown in the UK, M&S said it will affect profit from Clothing & Home as stores sales are significantly reduced.
"In a year when it has become impossible to forecast with any degree of accuracy, our performance has been much more robust than at first seemed possible. This reflects the resilience of our business and the incredible efforts of my M&S colleagues who have been quite simply outstanding," said Chief Executive Officer Steve Rowe.
Shares in Marks & Spencer were up 4.2% at 95.87 pence on Wednesday in London.
By Dayo Laniyan; dayolaniyan@alliancenews.com
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