M&S Store Closures as Covid Losses take their Toll

M&S is threatened with more store closures due to big losses last year as the Covid pandemic took its toll on clothing sales.

The retailer reports a pre-tax loss of £201.2m in the year to 27 March. This is down from a £67.2m profit the year before. But despite the loss, Marks & Spencer say that food sales were actually up, and it is the clothing and home sectors badly hit.

The 137 year old High Street chain is currently in the process of a big transformation programme. It has already seen shops closing in recent years, and 7,000 job cuts last year. Even with their large one-off restructuring expense, the firm managed a profit of £41.6m. But this is still nearly 90% lower than in the previous year. As part of their big turnaround plan, another 30 shops will close over the next 10 years.

The losses mainly came from the poor performance of its clothing division, which suffered as a result of closing non-essential retail during lockdown. Clothing and homeware sales dropped by 31.5%, highlighting the “heavy impact” of lockdown.

Lockdown restrictions changed people’s behaviours and way of living. It affected the way they shopped and what products they bought. The store had to adapt their operations to deal with the effects of social distancing and partial or full closure of shops.

Since the reopening of non-essential retail earlier this year, M&S say Clothing & Home sales are growing.

Food boost

It is their food sales that has kept the company going, contributing to “a resilient financial performance in a year of disruption”. The figures were helped largely by teaming their food department with online grocer Ocado. The move introduced a whole new group of shoppers to M&S, boosting their income, and a growth of 6.9% in their food division. The tie in with a food delivery service couldn’t have come at a better time than during a pandemic.

The business has survived the pandemic by accelerating changes in trading, and are planning for future growth. The transformation continues, and they now have a clear vision of the journey “to make M&S special again”.

The government gave M&S financial support of £306.1m, which helped offset the effect of lost trade to enable retention of employees.

The pandemic has had a catastrophic effect on businesses with retail stores. But there is hope as we now come out the other side. It has been a difficult year, that nobody could have planned for.

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