Marks & Spencer has completed steps to secure liquidity for the likely duration of the Covid-19 crisis and to underpin its recovery strategy and accelerated transformation in 2021.
The retailer plans to borrow cash through the government’s Covid Corporate Financing Facility, and has also reached an agreement with its banks to “substantially relax or remove covenant conditions” on its existing £1.1bn credit facility.
M&S said the moves will “secure liquidity” for the duration of the coronavirus crisis and “underpin the recovery strategy and accelerated transformation” during 2021.
As part of the planning for these measures, and in order to provide for the uncertain outlook, the board does not anticipate paying a dividend for the 2020/21 financial year, generating a cash saving of around £210m.
The retailer admitted that the health emergency has meant its clothing and home business would be “severely constrained” by lockdown, and warned that there were likely to be “highly uncertain trading conditions” during a “prolonged exit period” from the government’s measures.
In a statement, the company said: ”In the absence of a clear basis for forecasting, our scenario planning and stress tests are based on materially subdued trading for the balance of 2020 in clothing and home. M&S benefits from having a strong food business and the transition to Ocado supply is on track to proceed in September to form a multi-channel food operation.
“However, food trading has been adversely affected by lockdown due to the closure of cafes and slowdown in travel in some city centre locations.”
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