Marks & Spencer clothing sales hit by lockdowns in Christmas quarter

British retailer’s UK revenue slid 8.2% as international performance dropped 10.4%

MANCHESTER, ENGLAND - DECEMBER 22: People queue for food orders outside a Marks & Spencer store in Manchester city centre on December 22, 2020 in Manchester, England. A new strain of the Covid-19 virus has led to France closing ports to British goods for 48 hours from Sunday night.  This has led to a number of UK supermarkets warning of potential food shortages just a few days before Christmas. (Photo by Anthony Devlin/Getty Images)
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Marks & Spencer reported a sharp drop in clothing and homeware sales in its Christmas quarter as Covid-19 restrictions hit demand.

The retailer said UK revenue for its third fiscal quarter was 8.2 per cent lower than last year at £2.52 billion ($3.42bn), blaming “on-off restrictions and distortions in demand patterns” caused by the pandemic.

Revenue in its clothing and home division slumped 25.1 per cent in the 13 weeks to December 26, after falling 21.3 per cent in the previous three months.

“Beneath the Covid clouds we saw a very strong performance from the food business,” said Steve Rowe, chief executive of M&S.

Food sales contrasted with the poor clothing and home performance, rising 2.6 per cent over the quarter after a boost in demand during the four-week run-up to Christmas.

Retailers were hit hard at the start of the pandemic when the country went into lockdown and non-essential stores closed. While UK retail sales rebounded over summer, the second lockdown hit revenue once again, with England's third shutdown another hammer blow.

"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," Mr Rowe said.

(FILES) In this file photo taken on January 06, 2009 Clothes hangers are pictured in a Marks and Spencers retail store in Loughton, east of London. British supermarket chain Marks & Spencer pledged on January 6, 2021, not to use cotton from China's Xinjiang region in clothing it sells, a move to call for "change" in Beijing's treatment of the Uyghur minority. / AFP / SHAUN CURRY

During November's second national lockdown in England, sales fell by a fifth before recovering in December to be down 3.6 per cent against the same month in 2019.

Across the whole quarter, store sales declined by 46.5 per cent, which was partly offset by online sales growth of 47.5 per cent.

Adam Vettese, analyst at multi-asset investment platform eToro, said Marks & Spencer’s latest trading update is a disappointing one for investors, "capping off a pretty miserable 2020 for the iconic retailer".

“The next few months will be tough on M&S and other retailers now it looks as though England and many other parts of the UK could be in lockdown until Easter."

Looking at its international franchises, M&S, which has 18 stores in the UAE in partnership with Al-Futtaim, said its international revenue declined 10.4 per cent as sales were “impacted by changing restrictions across the globe”.

“Near-term franchise performance continues to be impacted by the changes in partner stock requirements as a result of the pandemic,” M&S said.

It followed a 25.5 per cent slump in the company’s half-year results, which included the closure of 84 per cent of its international stores in the second quarter.

The company swung to a half-year pre-tax loss of £87.6 million in September - its first since it became a publicly limited company in 1926 - as the pandemic hit clothing and homeware sales.