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Marks & Spencer has crashed to its first-ever loss as clothing sales collapsed during the first coronavirus lockdown, with more pain to come as its shops in England face new restrictions.
The retailer made a pre-tax loss of £87.6m in the six months to 26 September after a series of one-off costs, including the £92m bill for a major reorganisation that resulted in 7,000 job cuts.
With M&S’s clothing departments forced to close for half of the six-month period, the pandemic wiped more than £600m off its sales. The disruption resulted in the clothing arm turning over £917m compared with £1.5bn this time last year, pulling the division down to a £107m loss.
The retailer’s food halls fared better, by comparison, with sales flat at £2.8bn and the division making an operating profit of £110m. The Covid drag on stores in city centres and transport hubs – where trade has been hit by the shift to working from home – was offset by brisker sales in suburban locations. The business has also been buoyed by its recent tie-up with the online grocer Ocado.
The M&S chief executive, Steve Rowe, said trading had recovered after the first lockdown but new restrictions in England created “significant uncertainty” and would affect the profitability of its clothing business over the key Christmas period.
On Tuesday, Primark said it expected to lose £375m in sales during the new English lockdown, which the government has said will run until 2 December.
Despite the headline loss, Rowe said the company’s performance had 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.”
While trading in the retailer’s shops was affected by coronavirus measures, shoppers headed to its website, where sales were up 34% as Britons bought a new working from home wardrobe. Sales of women’s pyjamas and gym gear jumped 175% and 200% respectively. Men’s knitwear sales were also up 81%.
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