LONDON (Reuters) – British retailer Marks & Spencer said it was planning for a slow return to shopping and had taken steps to shore up its finances for 18 months, including scrapping next year’s dividend, to cope with the impact of the coronavirus crisis
The retailer said on Tuesday that its planning was based on it enduring subdued trading for the rest of this year in its clothing and home business, as it warned that its food division had been impacted by fewer people travelling into city centres.
M&S said that it had significant undrawn credit available for the next 18 months to deal with worst case scenarios on trading.
It said its banks had agreed to relax or remove covenant conditions for tests due later this year and in 2021, and it had also accessed the UK government’s coronavirus corporate finance scheme.
The retailer said it did not anticipate paying a dividend for the 2020-21 financial year, saving it 210 million pounds of cash. It had said in March that it will not pay a final dividend for its 2019-20 financial year.
Before the pandemic M&S was trying to turnaround its clothing unit, and it said on Tuesday that its financial planning included resources to underpin both a recovery and a faster transformation of the division in 2021.
The firm is due to report full-year results on May 20.
“We…will at that stage provide a further update on the very significant measures being taken to reduce costs and protect cash flow during the crisis period,” it said.
(Reporting by Sarah Young; editing by Kate Holton and James Davey)