Marks & Spencer has recorded a financial loss for the first time in its 94 years as a public company after the coronavirus pandemic forced it to shutter stores.
Half-year results to the 26 September showed clothing and home sales were hammered by the closure of non-essential retail during the first COVID-19 lockdown that began in March.
The retailer, which has undergone a transformation programme to shutter under-performing stores, invest in online and deliver groceries for the first time through a partnership with Ocado, reported a pre-tax loss of £87.6m.
The M&S partnership with Ocado began on 1 September
It had made profits of almost £160m in the same period last year.
M&S said clothing and home sales fell 21.3% in the second quarter – following a first quarter decline of 61.5% as the lockdown hit – leaving them almost 41% down over the six months.
Growth in online sales limited some of the damage.
Total revenue plunged by 16% to £4.1bn.
However, there were signs that the start of the Ocado partnership in September was bearing fruit as it contributed £38.8m to net profits on the back of a 48% leap in sales amid strong demand for deliveries from coronavirus weary households.
The wider M&S food operation – exempt from lockdown restrictions – recorded 2.7% growth in comparable sales.
The company updated on its progress amid the continuing Never The Same Again transformation programme that has resulted in 7,000 job losses as the chain shifts from its historic focus on stores.
Shares opened flat as it guided that clothing and home sales remained 21.5% down in October with food sales up 3%.
Chief executive Steve Rowe told investors: “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.
“But 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.
“From launching M&S Food online with Ocado, to establishing an integrated online business division, ‘MS2’, to step-change growth, we are taking the right actions to come through the crisis stronger and set up to win in the new world.”
John Moore, senior investment manager at Brewin Dolphin, said of the update: “Despite the company’s historic loss, there are some encouraging signs.
“The initial success of the Ocado partnership is highly promising and appears to be unlocking the food business’s previously untapped online potential”.
He added: “But the elephant in the room remains the company’s £2.5bn of lease obligations, which tie it into the traditional retail world and all its associated challenges.”