On the surface of it, Marks & Spencer has managed to pull off a well-run response to the coronavirus crisis, analysts in the City have said.
And on Wednesday their theories will be put to the test as the high street stalwart unveils its full-year results.
But the update, which covers the financial year to March 28, is expected to be overshadowed by questions for chief executive Steve Rowe and his team over how they are preparing for reopening non-food stores once lockdown is eased.
M&S has already announced it would scrap this year’s planned £130 million dividend payout. Investors will look for confirmation that next year’s £210 million dividend is also off the table.
Measures including pay freezes, cuts on discretionary spending such as advertising and pausing all non-essential recruitment have also helped reduce costs – although essential workers in stores are being given a 15% bonus.
Some staff have been furloughed, non-food stores closed and a handful of shops in business districts are also shut. The Government’s business rates holiday has also saved the retailer £180 million.
Analysts have welcomed the moves to secure a financial future, which also included the company announcing it would be eligible for a Government loan, via the Bank of England, and may use it if required.
But they will want details on what base scenario M&S is operating from and how Mr Rowe and his team can emerge from the Covid-19 crisis.
Retail analyst Clive Black, at Shore Cap, said: “No doubt the group will seek to outline to the best of its capability, expectations in what remain very volatile, uncertain and potentially straitened times.”
Geoff Lowery, retail analyst at Redburn, added: “The group’s liquidity position puts it in the survivor bucket. Yet, the trajectory of earnings, even beyond immediate virus impacts, is opaque.
“The energy and drive of the management team is welcome and important but is there an answer?”
Mr Rowe will also be expected to update on plans for launching an online food offering, following its link-up with Ocado.
The launch date is in September and M&S will be keen to cash in on the rise of home delivery from lockdown, determined to open on time.
Either way, the share price started the year at 215.9p and closed the week out at just 84.05p and if there is any chance of its recovery, analysts will want the details of how customers will splash the cash before recommending investors start doing the same.