Marks & Spencer swung to a loss for the first time in its 94 years as a public company as it warned of “significant uncertainty” ahead due to the pandemic and Brexit.
The struggling retailer posted a £87.6m pre-tax loss for the six months to Sept 26, compared to a £159m profit for the same period last year. Revenue fell almost 16pc to £4.09bn.
The decline was driven by its clothing and home business, which was hammered during the crisis, with sales down by more than two-fifths.
However, bosses said the performance was better than expected, with the revenue decline outperforming the company’s Covid-19 planning scenario by 22.8pc.
“As a result, the group exited the period with reduced stock levels year on year and generated free cashflow,” it said.
Its food division performed well during the period, and was boosted by its new partnership with Ocado, which helped to mitigate some of the impact from the closure of its stores.
The FTSE 250 company said trading in October continued at similar rates to the end of the second quarter, but warned of “significant uncertainty” as the UK heads for a second lockdown.
It added that the circuit breaker lockdown will impact clothing and home profit as store sales are significantly reduced, though it will be offset by increased online sales and reduced costs supported by furlough income.
In August, the retailer announced plans to axe 7,000 jobs amid a scramble to boost internet sales and revive its fortunes under its “Never the Same Again” transformation programme.
The company is already in the process of shutting more than 100 stores as it fights the high street downturn, with the market braced for even more closures.
On Brexit, it said its plans for the transition period ending are “well advanced”, but added that a no-deal exit would most likely increase food prices for consumers and could hit profitability at its international business.
Analysts at Peel Hunt said: “Clearly there are many moving parts here and management is trying hard to streamline the business. The key to today’s announcement is the current trading statement. Food sales are up by 3pc in the last month and non-food is down by 21pc. Neither are great nor disastrous numbers.”
Chief executive Steve Rowe said: “In a year when it has become impossible to forecast with any degree of accuracy, our performance has 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 who have been quite simply outstanding.”
Shares jumped 4.8pc to 96.4p in morning trading.