According to reports, the financial cost of the global Covid pandemic is becoming evident as retail giants, Mothercare and M&S, both report end of year losses.
Mothercare plc has announced its unaudited net worldwide franchisee retail sales for the financial year to March 2021 were £326 million – £216 million (40%) below the previous year, reflecting the impact of Covid-19 in the various markets in which its franchisees operate around the world.
As a global brand, Mothercare says the impact of Covid-19 has varied enormously by market as the countries in which its franchise partners operate have addressed the Covid-19 pandemic in many different ways including, but not limited to, restrictions on travel, movement and operating hours of retailers. These issues have been compounded by similar restrictions for its manufacturing partners, which, coupled with the disruption to the global movement of freight, have caused additional challenges with availability of product for franchise partners further impacting sales for the year.
Clive Whiley, Chairman of Mothercare, said:
“Our performance in 2021 shows that whilst we are not immune to the impact of the pandemic on our franchise partners’ operations around the world, we have ended the year in a far stronger position than we started it. Our resilient performance and financial position bears out the robustness of the Mothercare business today, delivering what will be a positive if modest EBITDA result for the year. We enter FY22 as a conservatively financed, cash generative and profitable business. We expect 2022 to be a year of further progress and we can now focus upon developing our strategy and future plans to optimise the competencies and attributes of Mothercare over the next five years. That is an exciting prospect for all of our staff and stakeholders as we hopefully exit this most uncertain of times.”
Meanwhile, Neil Shah, Director of Research at Edison Group, commented on M&S’ full year results:
“For the 52 weeks ending 3rd April, M&S tumbled to a substantial pre tax, statutory loss of £201.2m, a figure unsurprisingly largely informed by the pandemic inflicted lockdowns that shattered footfall figures. With stores open, such figures are unlikely to be repeated.
But what’s perhaps of more import is how the online element to the business has fared over the year given it will play an increasingly important role in informing future performance – with food and clothing set to continue their rapid shift to online.
Excluding Ocado, group online revenue was £1.5bn, representing a 53.9% growth (which in the short term helped hedge against the 56.2% decline in store revenue). Meanwhile, Ocado orders now comprise, on average, of over 25% M&S products. Such placement is vital going forward, as Ocado remains close to the fore in an ever more competitive grocery delivery market.
M&S’ hybrid MS2, whilst difficult in its infancy to judge already, will also be interesting to monitor to see if it can compete against Amazon stores and ever more technology based stores from more traditional competitors. The app based system allows customers to scan and pay as they go.”