| 9.4°C Belfast

High Street changed forever, says M&S as profits plummet

Close

Marks & Spencer has around 20 stores in Northern Ireland

Marks & Spencer has around 20 stores in Northern Ireland

AFP via Getty Images

Marks & Spencer has around 20 stores in Northern Ireland

Shopping has changed forever, the head of Marks & Spencer has said as the retailer revealed that profits have plummeted.

Marks & Spencer - which has around 20 stores in Northern Ireland - saw profits stumble for the past year after taking a £52m hit due to coronavirus.

The retailer revealed that total profits dived by 21% to £403.1m after it was dragged down by its troubled clothing business.

It came as the company told investors it has "hibernated" around £200m of unsold stock in warehouses for spring 2021.

Sales of clothing and home products plummeted after stores shut in the face of the outbreak.

Last month, the retail giant revealed plans for a "never the same again" overhaul as it warned the virus would impact trading for the rest of 2020.

Chief executive Steve Rowe said: "Last year's results reflect a year of substantial progress and change including the transformative investment in Ocado Retail, outperformance in Food and some green shoots in Clothing in the second half.

"However, they now seem like ancient history as the trauma of the Covid crisis has galvanised our colleagues to secure the future of the business. Whilst some customer habits will return to normal, others have changed forever, the trend towards digital has been accelerated, and changes to the shape of the high street brought forward.

"Most importantly, working habits have been transformed and we have discovered we can work in a faster, leaner, more effective way. I am determined to act now to capture this and deliver a renewed, more agile business in a world that will never be the same again."

M&S said it expects a 70% drop in UK clothing and home revenues over the four months to July, before a gradual recovery.

However, it predicted annual revenues for the current year will fall by £1.5bn as a result. It expects food sales - impacted by lower sales and closures at travel locations - to fall by 20% in the period to July before levelling out, with a £400m impact on annual revenue.

Mr Rowe said M&S is moving forward with around £1bn of actions - including around £500m of cost reductions - to mitigate the impact of the outbreak.

He also hailed the company's progress ahead of the launch of its joint venture with Ocado in September to deliver products to customers.

He revealed that, alongside its core food products, the company will sell a range of clothing and home products on the platform.

The retailer said profitability improved in its food business in the year to March but profits dropped by more than a third in its clothing and home arm.

Belfast Telegraph