M&S says it will “change ways of working permanently” and implement “very significant” cost-cutting measures when it publishes annual results next month overshadowed by the coronavirus crisis.
The retailer said it had seen “severely constrained” trading in its key clothing and home division during the lockdown and is preparing for more uncertainty during a “prolonged exit period”.
Food sales have also been hurt by the closure of cafes and a slowdown in trade at outlets based in railway stations and city centres as the pandemic restricts travel.
M&S, which was already preparing to make changes as it seeks to turn around its fortunes, added that the crisis had “created a very different way of working and rapid learning for the business at all levels”.
Under a “never the same again” strategy set to be revealed at the results day in three weeks’ time, it will “outline measures being taken to accelerate the transformation programme and change ways of working permanently”, the company added.
For now, the beleaguered retailer is shoring up its finances for the next 18 months by making new arrangements with lenders, accessing a government corporate finance support scheme and scrapping a dividend worth £210m.
Even before the lockdown, the company was already looking for a strategy to try to reverse years of relentless decline – which last year saw it relegated from the FTSE 100 after 35 years.
It has already acknowledged that profits for the 2019/20 financial year will fall short of the £440m pencilled in by analysts before the crisis struck.
The company’s latest outlook plans for a subdued period of trading for the rest of 2020 even after restrictions are lifted.
However it said its food business was on track for a tie-up with online grocer Ocado due to start in September which will make M&S products available for home delivery.
Sophie Lund-Yates, equity analyst at Hargreaves Lansdown, said the warning of subdued trading was a “welcome dose of foresight” by warning over an ongoing hit to trading.
She said: “It would be a mistake to think the high street’s going to see a sea of shoppers the second lockdown restrictions are lifted.”
However, the deal with Ocado should put it in a “good position” to benefit from a shift to online grocery, the analyst added.