M&S Strengthened liquidity for Covid crisis

Marks and Spencer Group Plc

MARKS & SPENCER ANNOUNCES STRENGTHENED LIQUIDITY FOR COVID CRISIS

Marks & Spencer has now completed steps to secure liquidity for the likely duration of the COVID crisis and to underpin the recovery strategy and accelerated transformation in 2021. 

We are planning for the Clothing & Home business to be severely constrained during lockdown and highly uncertain trading conditions in a prolonged exit period. In the absence of a clear basis for forecasting, our scenario planning and stress tests are based on materially subdued trading for the balance of 2020 in Clothing & Home. M&S benefits from having a strong food business and the transition to Ocado supply is on track to proceed in September to form a multi-channel food operation. However, Food trading has been adversely affected by lockdown due to the closure of cafes and slowdown in travel and some city centre locations.

We have therefore taken steps to maximise liquidity for the likely duration of the crisis and recovery period beyond. 

- Formal agreement has been reached with the lending syndicate of banks providing the £1.1bn revolving credit facility to substantially relax or remove covenant conditions for the tests arising in September 2020, March 2021, and September 2021.

 - M&S has been confirmed as an eligible issuer under the UK Government's Covid Corporate Financing Facility (CCFF), providing significant further liquidity headroom.

 - 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.

 - As part of the planning for these measures and in order to provide for the uncertain outlook the board does not at this stage anticipate paying a dividend for the 2020/21 financial year, generating a cash saving of c.£210m.

We are scheduled to report preliminary full year results on 20 May and will at that stage provide a further update on the very significant measures being taken to reduce costs and protect cash flow during the crisis period. 

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.

This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.

-Ends-

Statements made in this announcement that look forward in time or that express management's beliefs, expectations or estimates regarding future occurrences and prospects are "forward-looking statements" within the meaning of the United States federal securities laws. These forward-looking statements reflect Marks & Spencer's current expectations concerning future events and actual results may differ materially from current expectations or historical results. Any forward-looking statements are subject to various risks and uncertainties, including, but not limited to, failure by Marks & Spencer to predict accurately customer preferences; decline in the demand for products offered by Marks & Spencer; competitive influences; changes in levels of store traffic or consumer spending habits; effectiveness of Marks & Spencer's brand awareness and marketing programmes; general economic conditions or a downturn in the retail or financial services industries; acts of war or terrorism worldwide; work stoppages, slowdowns or strikes; and changes in financial and equity markets. For further information regarding risks to Marks & Spencer's business, please consult the risk management section of the 2019 Annual Report (pages 27-33).

The forward-looking statements contained in this document speak only as of the date of this announcement, and Marks & Spencer does not undertake to update any forward-looking statement to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

For further information, please contact:

Investor Relations:

Fraser Ramzan: +44 (0)20 3884 7080

Hannah Chambers: +44(0) 20 3882 4714

Media enquiries:

Corporate Press Office: +44 (0)20 8718 1919