Marks & Spencer has cautioned that its clothing and home business is likely to be “severely impacted” by the coronavirus outbreak, and has warned that as a result, profits for the current quarter may not hit targets.
M&S said in a statement that clothing and home sales have seen “substantial decline” since the crisis began, and that profits for the current quarter were likely to be either at the bottom end of the forecast of £440m-£460m, or potentially lower if trading in clothing and home continued to be hit.
Store closures and deferred product supply were two initiatives the retailer is considering to mitigate the impact.
In a statement, M&S said: “There will be a substantial impact on clothing and home revenue at the very least in the first three to four months of the next financial year. Although it is possible that this may ease as we get into summer trading, margins are likely to be severely impacted by the surplus of unsold seasonal stock and probable clearance activity in the marketplace.
“We are therefore taking all possible steps to defer supply. However, a very large part of our core business is less seasonal year-round essential product, and this should provide some scope for carrying forward stock. At this stage we are not assuming a return to normal trading in the autumn.”
Additional, long-term measures to combat the challenge posed by the virus include postponing capital commitments, further managing cost base, reducing non-essential spending: freezing non-essential recruitment and reducing marketing spend, and reducing the supply pipeline by £100m.