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Marks & Spencer Warns On FY20 Profit Amid COVID-19; Sees Growth In Food Sales

Retailer Marks & Spencer Group plc (MAKSY.PK,MAKSF.PK,MKS.L) Friday said its quarter to date results have been adversely affected by the impact of coronavirus or COVID-19. Fiscal 2020 outlook for Group Profit Before Tax and adjusting items until the current week was within the range of market expectations and in line with the guidance issued in January. Food business has so far remained strong, the company noted.

Going ahead, the company said it is not possible to provide meaningful earnings guidance as trading over the next 9-12 months in Clothing and Home and International businesses is likely to be severely impacted.

The company said the profit before tax could be at or below the bottom end of the range of 440 million pounds to 460 million pounds, given probable very depressed trading in Clothing and Home.

There will be a substantial impact on Clothing and Home revenue at the very least in the first 3-4 months of the next financial year.

However, the company expects the food business to trade profitably throughout. The significant shift to eating in home would continue to benefit sales in the months ahead.

International business will see significant reductions in sales as major markets are adversely affected by lockdown and closures.

Further, the Board does not anticipate making a final dividend payment for this financial year, resulting in an anticipated cash saving of about 130 million pounds.

The company added that it remains confident that the post crisis future of the business and its transformation programme remains as strong as ever. The firm has access to substantial liquidity through its 1.1 billion pounds revolving credit facility which has a maturity of April 2023 and is undrawn. Total available liquidity is 1.34 billion pounds.

The Board remains confident of the transformation programme and does not believe that the long-term value of M&S beyond the coming year will be impacted by the virus.

The company plans to report full-year results on May 20.

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