Marks & Spencer (MKS.L) has made its first loss in almost 100 years as a result of the COVID-19 pandemic.
The stalwart retailer said on Wednesday it made a pre-tax loss of £87.6m ($113.7m) in the six months to 26 September. The company lost £71.6m after tax and revenue fell 16% to £4bn.
The performance heralds the business’s first loss as a publicly listed company. Marks & Spencer was founded in 1884 and went public in 1926. For comparison, M&S made a profit of £176m in the first half of its last financial year.
Chief executive Steve Rowe said the recent performance was “much more robust than at first seemed possible” thanks to “the resilience of our business and the incredible efforts of my M&S colleagues.”
Ahead of the results, city analysts had predicted half-year losses at M&S could be as high as £95m, although the consensus forecast was a loss of £59m.
Analysts at UBS said M&S’s underlying sales were better than expected and the stock rose 5% on the day.
The historic loss was caused by the COVID-19 pandemic, which forced M&S to shut its stores for several months earlier this year.
Clothing and homeware sales fell 60% during lockdown. Two thirds of sales historically came from M&S stores on High Streets, in shopping centres, and in city centres — all of which have suffered.
M&S said demand for formalwear and outerwear — which traditionally made up a quarter of clothing sales — plummeted as weddings and events were cancelled.
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Marks & Spencer’s clothing and home division lost £107.5m in the six months to the end of September. Sales were down 40% across the period.
One of the few bright spots was M&S’ food business. A new joint venture with Ocado grew sales by almost 50% and Mark & Spencer’s entire food business squeezed out positive sales growth of 2.7% over the last six months.
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Earlier this year M&S announced a new transformation plan — dubbed “Never the Same Again” — to help it weather the COVID pandemic. The company announced plans to lay off 7,000 staff in August as part of the shake-up.
“Out of adversity comes opportunity and, through our Never the Same Again programme, we have brought forward three years change in one to become a leaner, faster and more digital business,” Rowe said on Wednesday.
M&S plans to launch a new digital division — MS2 — that will “maximise the online opportunity” across the business.
Marks & Spencer warned there was still “significant uncertainty” as a result of COVID-19 and Brexit. Poor sales trends seen in the first half have also continued over the last four weeks. Food sales were up 3% but clothing and home revenue fell 22%.
Shares in M&S have fallen almost 60% since the start of the year.