M&S hit by Covid-19 restrictions and EU paperwork

Boss Steve Rowe also warned that, despite the UK signing a free trade agreement with the EU, new rules and regulations are set to “significantly impact” its overseas ventures in Ireland, the Czech Republic and France.
M&S hit by Covid-19 restrictions and EU paperwork

M&S has seen a slump in sales but said Christmas was ‘robust’ (Danny Lawson/PA)

Covid-19 restrictions in the past three months saw Marks & Spencer take a knock in sales as the retailer suffered from the November lockdown and tiering restrictions.

Bosses at the high street stalwart revealed that sales in the three months to December 26 fell 7.6% on a like-for-like basis, with the food division growing 2.6%, but clothing and home sales dropped 24.1%.

The national lockdown in England hit particularly hard, with both food and non-food sales down 4.5% and 40.5% respectively.

Online sales were strong – including a new tie-up with Ocado to offer grocery deliveries for the first time – and shoppers were keen on buying sleepwear and leisurewear as they stayed indoors.

Boss Steve Rowe also warned that, despite the UK signing a free trade agreement with the EU, new rules and regulations are set to “significantly impact” its overseas ventures in Ireland, the Czech Republic and France, although he insisted the company is “actively working to mitigate” the issues.

However, he said that, in spite of the Brexit and Covid knocks, M&S had a “robust” Christmas period.

“More importantly, beneath the Covid clouds, we saw a very strong performance from the food business, including Ocado retail, and a further acceleration of clothing and home online.”

Looking forward, Mr Rowe said: “Near term, trading remains very challenging, but we are continuing to accelerate change under our Never The Same Again programme to ensure the business emerges from the pandemic in very different shape.”

On the food division, the retailer saw mixed results, with food-on-the-go sales dropping in towns and city centres as office workers stayed at home.

But there were strong sales in the four weeks leading up to Christmas – up 8.7% – particularly at large retail park and Simply Food stores, which have remained open throughout as “essential” retailers.

M&S added that the clothing and home division has been repositioning its ranges and the 46.5% fall in in-store sales was partially offset by 47.5% growth in online sales. This included a rise in the number of full-price items sold.

International revenues dropped 10.4% due to global Covid-19 restrictions, and the company warned that the new free trade agreement between the UK and the EU is causing problems with “potential tariffs on part of our range exported to the EU, together with very complex administrative processes”.

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