Marks & Spencer cancels £100m in clothing orders and considers temporary closures
Marks & Spencer has cancelled £100m in clothing orders and is considering closing stores temporarily during the COVID-19 Coronavirus outbreak.
The high street retailer had said its stores would remain open during the crisis but that it expected to take a significant hit on clothing & home, with staff in those departments redeployed to food wherever practical.
In a trading update today it said it was cutting all unnecessary costs and the cancellation of the clothing orders were to avoid it being left with a glut of stock as non-essential retailers across the country shut up shop. Prime Minister Boris Johnson has yet to legally enforce a shutdown of non-essential retail but it is expected that this will happen as the spread of the virus escalates.
The retail said one of the steps it was taking was cancelling forward orders and holding over inventory in clothing. The company said it would be: "Reducing the supply pipeline by over £100m and holding over stock: with around two thirds of our Clothing inventory ‘core’ product we will take extraordinary measures to hold over inventory."
Marks & Spencer's food has not seen the same huge uplift in sales that other retailers have witnessed in recent weeks, given its focus on fresh produce and convenience food, with shoppers looking to stock up longer life tins and packaged food.
Nigel Frith, a senior market analyst at www.asktraders.com commented on the news: "Marks and Spencer has warned that it is considering temporary store closures in the latest sign of coronavirus hammering the high street.
"As stricter measures are being advised to protect the public from the killer virus and as consumer confidence plummets, clothing sales have unsurprisingly been hit. Marks is not even seeing the benefits of panic buying like its supermarket peers"
In its statement M&S pointed out that the business had continually traded "through two world wars, terrorist bombings and numerous local disasters and we are determined to support our customers now as we always do."
However it added that it could not rule out shuttering some stores temporarily: "We are preparing for the contingency that some stores may have to close temporarily. However, our business model of operating parallel Clothing and Food businesses and our strategy to move online including the Ocado joint venture should provide more resilience than some single sector businesses."
In September M&S is due to take over as the parter to online grocer Ocado, which is currently partnered with Waitrose, and which has been overwhelmed with demand during the crisis.
At the moment M&S said it is not assuming the business will be able to return to normal trading patterns by the autumn and Asktraders' Frith said the disruption to its already struggling clothing business could prove to be disastrous.
"Whilst M&S has survived many wars and economic downturns it needs to see a rapid pick up in clothing demand to ensure that its clothing business survives, otherwise coronavirus could be the nail in the coffin for Marks, whose share price is down 50% so far this year," he said.