* 2020-21 underlying profit falls to 50.3 mln stg
* Clothing and homeware sales down 31.5%
* Says encouraged by trading in new financial year
* Forecasts 2021-22 profit of up to 350 mln pounds
* Shares up 7%
LONDON, May 26 (Reuters) - British retailer Marks & Spencer
forecast a rebound in profit this year after an 88%
slump in 2020-21 that reflected a collapse in clothing sales due
to the COVID-19 pandemic but warned investors not to expect a
dividend this year.
Chief Executive Steve Rowe said the results masked progress
made in the 137-year-old group's latest turnaround plan, while
trading in the early weeks of its new financial year had been
Shares in M&S were up 7.3% at 167.4 pence at 0934 GMT. They
were changing hands for 236 pence in May 2019.
Rowe, along with chairman Archie Norman, has focused on
transforming the company's culture, improving clothing and food
products and value to broaden its appeal, while closing stores
and investing heavily in technology and e-commerce, including a
joint venture with Ocado.
"By going further and faster in our transformation during
this period of disruption...we have now moved beyond fixing the
basics to forge a reshaped M&S that is ready for the next
phase," he told reporters.
"We now have a clear line of sight on the path to make M&S
special again," he said.
With online penetration of its clothing and home business
expected to grow to up to 50%, Rowe said M&S would accelerate
the re-shaping of its store estate.
M&S currently has 254 full line stores, selling clothing and
homeware and food. It is now targeting a fully modernised core
of about 180 stores.
The group made a pretax profit before one-off items of 50.3
million pounds ($71.2 million) in the year to April 3, down from
403.1 million pounds in 2019-20.
Like-for-like clothing and homeware sales plunged 31.5%,
damaged by multiple coronavirus lockdowns which shuttered
stores. Clothing and homeware sales in stores crashed 56.2%,
partly offset by online growth of 53.9%.
In food, where space remained open during the crisis,
like-for-like sales rose 1.3%.
On a statutory basis M&S sank to a pretax loss of 209.4
million pounds, versus a profit of 67.2 million pounds in
All UK clothing retailers have been hit hard by the
pandemic. Last month Primark which does not trade
online, reported a drop in annual profit of 90%. Next,
which has a huge online business, has shown greater resilience
but its full-year profit still fell 53%.
M&S said trading for the first six weeks of the 2021-22
financial year had been ahead of the comparable period two years
ago and its central expectations.
It forecast underlying pretax profit to recover to 300-350
million pounds in 2021-22 and a further reduction in net debt.
($1 = 0.7065 pounds)
(Reporting by James Davey; editing by Kate Holton, Kirsten