Marks and Spencer has announced it will not pay a dividend for the 2020/21 financial year in its latest effort to “maximise its liquidity”. It expects the move to produce a cash saving of around £210m.
The retailer revealed it has also reached an agreement with its lending banks to relax or remove certain financial conditions for its £1.1bn overdraft facility until September 2021.
In order to further extend its liquidity headroom, the group has also been confirmed as an eligible issuer under the government’s Covid Corporate Financing Facility.
In its latest statement, the retailer said: “The agreement with the banks combined with other measures we have taken means that under our base planning scenarios and even more adverse assumptions, the business would have significant undrawn credit available for the 18 months ahead.”
The group is now scheduled to report its preliminary full year results on 20 May, where it will also provide a further update on the significant measures being taken to reduce costs and protect cash flow during the pandemic.
The retailer added: “The crisis has created a very different way of working and rapid learning for the business at all levels.
“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.”
The latest efforts to maximise liquidity come after the retailer warned that its clothing and home business would continue to be “severely constrained” during lockdown, with “highly uncertain” trading conditions in the prolonged exit period.
Its food business has also been adversely affected by the nationwide lockdown due to the closure of cafes, the slowdown in footfall and closure in some city centre locations.
Nonetheless, it hopes that these latest measures will “underpin the recovery strategy and accelerated transformation in 2021”.