Marks & Spencer secures fresh funding, expects 'subdued' fashion sales throughout 2020

Marks & Spencer has announced it has received fresh funding to secure liquidity during the Covid-19 pandemic and beyond, and has warned of “subdued” trading in its Home & Clothing division throughout the year.

The British retail giant has struck a formal agreement with banks providing the 1.1 billion pound revolving credit facility “to substantially relax or remove covenant conditions for the tests arising in September 2020, March 2021, and September 2021.”

The company also said it expects its Clothing & Home business to be “severely constrained during lockdown and highly uncertain trading conditions”.

Unlike other European countries who have begun to outline exit strategies and ease lockdowns, the UK government has been tight-lipped about any such move.

“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 & Home,” Marks & Spencer said.

Marks & Spencer announces ‘never the same again’ programme

The company also hinted at a drastic change to the way it does business in light of the pandemic. “The crisis has created a very different way of working and rapid learning for the business at all levels,” it said. “At the time of the results presentation we will also outline measures being taken to accelerate the transformation programme and change ways of working permanently under our ‘never the same again’ programme currently being prepared for implementation.”

It has also been confirmed as an eligible issuer under the UK Government's Covid Corporate Financing Facility (CCFF), providing it with “significant further liquidity headroom”.

The company said it has significant undrawn credit available for the next 18 months.

It does not expect to pay a dividend for the 2020/21 financial year, resulting in a cash saving of around 210 million pounds.

Marks & Spencer is set to report its preliminary full-year results on 20 May.

Photo credit: Marks & Spencer