StockMarketWire.com - Clothing and food retailer Marks & Spencer scrapped its dividend and warned its annual result for the 2020 financial year could come in below its current guidance range, as the coronavirus hits its clothing unit.

The company also warned that its performance will likely be hurt in 2021, though it was too early to tell by how much.

For the year through March 2020, pre-tax profit could be at or below the bottom end the company's £440m-to-460m guidance range.

'In the current circumstances the board does not anticipate making a final dividend payment for this financial year, resulting in an anticipated cash saving of about £130m,' Marks & Spencer said.

Trading in the company's clothing and home business was expected to be 'severely impacted' and some staff in that unit were being redeployed to the food business.

The food business had so far remained strong, it added.

'There will be a substantial impact on clothing and home revenue at the very least in the first three-to-four months of the next financial year,' the company said.

'Although it is possible that this may ease as we get into summer trading, margins are likely to be severely impacted by the surplus of unsold seasonal stock and probable clearance activity in the marketplace.'

The food business, however, was expected to 'trade profitably throughout'.

'At this stage we have benefited on a small scale as customers stock up but our heavy bias to chilled and fresh means we are not seeing the forward buying uplift experienced by the major grocers,' Marks & Spencer said.

'The significant shift to eating in home should however continue to benefit sales in the months ahead.'

Marks & Spencer said it had 'substantial liquidity' through its £1.1bn revolving credit facility, which has a maturity of April 2023 and was undrawn, and a further £50m of uncommitted facilities and current cash balances of about £185m.

Total available liquidity was therefore £1.34bn.



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