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British Brand M&S Expected To Report 90% Slump In Pandemic Year Profits

British Brand M&S Expected To Report 90% Slump In Pandemic Year Profits
The Covid-19 pandemic severely hit the clothing sale last year of Britain's Marks & Spencer resulting in the brand to report a 90 per cent drop in its profits for the full year of 2020.
A pretax profit before one-off items of 43 million pounds ($61 million) for its year to April 3 is expected by analysts on the average to be reported the 137 year old M&S which is one of the best known brands in the British retail industry. In comparison the company had reported a profit of 403 million pounds in the 2019-20 fiscal year.
The company reported a loss for the first half of its fiscal year in November last year which was its first half year loss since the company had got listed at the stock market way back in 1926.
The loss also reflects an expected drop of 34 per cent in the clothing and homewares like-for-like sales in the United Kingdom because of continued and multiple lockdowns due to the pandemic which forced the retailer to shut down its physical non-food stores. The result of the company is also expected to slightly offset by a 1.2 per cent growth in its foods business.
The health crisis has severely hit all UK clothing retailers. A 90 per cent drop in its profits was announced by Primark, which does not have an online sale channel, last month. And despite having a very large online sale channel, a 53 per cent drop in its full-year profit was reported by Next.
M&M was the first British retailer to report an annual pretax profit of more than 1 billion pounds in 1998 and that feat was repeated by the company 10 years later in 2008.
The group is currently undergoing a turnaround which is being driven by the group’s chairman Archie Norman, along with CEO Steve Rowe. The turnaround include a transformation of the organizational culture of M&S, close down unprofitable stores, increase the use of technology in its operations and improvement in the value of the products offered to customers to enhance the appeal of the brand.
2020-21 has been described as a “lost year" for profitability of the retailer by Norman. However even before the pandemic hit the industry, <&S had been struggling ot make profits.
M&S’s business would be indelibly changed by the crisis, the company said a year ago and had added that its turnaround plan would be accelerated such that it would deliver three years’ worth of change in just one year. 7,000 jobs were axed by the company in Aufust last year.
It is more important to look at the consequences of the turnaround plan taking shape this year instead of looking back at last year’s performance of the company, said analysts at Barclays.
"We will be interested in any colour as to how trading has developed in the early part of full year 2021-22 - there could be positive noises as stores have been able to reopen and because M&S faces weak comps from this time last year," they said.

Christopher J. Mitchell

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