Marks and Spencer has scrapped next years dividend as it looks to cut costs and preserve cash, warning that disruption from the coronavirus crisis may last for the rest of 2020.
M&S will save £210m by suspending the shareholder payout and said the banks that provide its £1.1bn overdraft facility had agreed to relax or remove certain financial conditions until autumn 2021. Last month, the group axed its final dividend for 2019-20, saving £130m.
The retailers stores with food halls have remained open during the lockdown, but it said government travel restrictions have affected trading at some of its city-centre locations and the closure of its cafes has also affected its profits.
M&S had previously warned it had not enjoyed the same boost to food sales as other grocers as shoppers stocked up for the lockdown because of its tendency to sell chilled and fresh products, which have a short shelf life.
The group said sales of clothing and homeware had been “severely constrained during lockdown” and would be lower for the rest of the year, even as restrictions are gradually lifted.
As the crisis took hold in March, M&S abandoned plans to order £100m-worth of goods for its spring and summer ranges, to avoid being left with stock it was unable to sell.
The retailer will publish its annual results on 20 May, and has already warned profits for the last financial year will fall short of the £440m that analysts had forecast before the crisis.
The decision not to pay a dividend sets M&S apart from Britains biggest supermarket chain, Tesco, which came in for criticism for paying out £635m to its shareholders, at the same time as receiving a similar-sized package from the government in the form of a business rates holiday. Government support is expected to save M&S about £180m.
The retailer says its deal with online delivery firm Ocado to sell its groceries to internet shoppers is on track for September.
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