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M&S curtails expenses to cover COVID-19 loss

Marks & Spencer has recorded substantial sales declines in clothing and home business due to the Coronavirus outbreak. The brand’s forecast for group pre-tax profit (PBT) for the quarter to date has been adversely affected by the virus but was within the range of market expectations and in line with the guidance issued in January until the current week”. The final result could be at or below the bottom end of the range of PBT of £440m-£460m, given probable very depressed trading in Clothing and Home.

The brand is now planning on the basis of a prolonged downturn in demand for clothing and home and may close some of stores temporarily. This dent to the clothing and home business is expected to last, at least, for three or four months into the new financial year, although it's possible that this may ease as summer trading gets under way. Its margins are likely to be severely impacted by the surplus of unsold seasonal stock and probable clearance activity in the marketplace.

The company has welcomed the UK government’s support on business rates as it paid out around £180 million for those property taxes in the UK last year. It's working to cut costs by postponing capital spending, deferring all pay increases and deferring or cancelling discretionary spend. That includes reducing its marketing spend. It's also reducing the supply pipeline by over £100 million and working to grow its online penetration.