High street stalwart Marks & Spencer has frozen all pay rises and suspended all spending not seen as absolutely essential as it warned that its clothing and home lines would take a severe hit from the coronavirus pandemic.
The retailer warned that profit will now likely be at the lower end of its expectations, even as it massively slashed spending.
“Whilst we remain confident that the post-crisis future of the business and our transformation programme remains as strong as ever, trading over the next nine to 12 months in our clothing and home and international businesses is likely to be severely impacted,” M&S said in a statement to investors on Friday.
The business said that staff members from its clothing and home segments would be moved into the food halls “wherever practical” and all pay increases would be deferred.
It will also defer or cancel all discretionary spending, freeze non-essential recruitment and reduce the amount it spends on marketing.
Meanwhile it will only spend around £80 million on capital projects in the 2020/21 financial year, from a budget of up to £400 million
The business also announced plans to grow online.
The retailer said that it was still on track to reach its full-year forecasts until this week. But it warned on Friday that profit before tax is likely to be at the lower end of its predicted £440 million to £460 million due to the “probable very depressed trading in clothing and home”.
Food sales have done better, but customers looking for tins and other durable goods have turned elsewhere as M&S focuses on fresh and chilled good.
The board also said it does not expect to pay a dividend this year.
“It is not possible to provide meaningful guidance on future earnings, although we are taking every step to secure future value for shareholders, colleagues and suppliers,” M&S said in the statement.