Marks & Spencer saw profits stumble for the past year after taking a £52 million hit due to coronavirus.
The retailer revealed that total profits dived by 21% to £403.1 million after it was dragged down by its troubled clothing business.
Also on Wednesday it was revealed UK inflation plunged to its lowest level for nearly four years last month due to tumbling fuel costs and energy prices, according to official figures.
The Office for National Statistics (ONS) said the rate of the Consumer Price Index (CPI) fell more than expected to 0.8% in April – the lowest level since August 2016 and down sharply on the 1.5% recorded in March.
The news from Marks & Spencer came as the company told investors it has “hibernated” around £200 million of unsold stock in warehouses for spring 2021.
Sales of clothing and home products plummeted after stores were shut in the face of the outbreak.
M&S said it expects a 70% drop in UK clothing and home revenues over the four months to July, before a gradual recovery.
However, it predicted annual revenues for the current year will fall by £1.5 billion as a result.
It expects food sales – impacted by lower sales and closures at travel locations – to fall by 20% in the period to July before levelling out, with a £400 million impact on annual revenue.
Chief executive Steve Rowe said the company is moving forward with around £1 billion of actions – including around £500 million of planned cost reductions – to mitigate the impact of the outbreak.
He also hailed the company’s progress ahead of the launch of its joint venture with Ocado in September to deliver products to customers.
He revealed that, alongside its core food products, the company will also sell a range of clothing and home products on the platform.
The retailer said profitability improved in its food business during the year to March but profits dropped by more than a third in its clothing and home arm.
The company said group sales dipped 1.9% to £10.1 billion during the year.
Like-for-like food revenues increased by 1.9%, while its clothing business saw like-for-like revenues dive 6.2% as it was impacted by availability issues in the first half of the year.
Last month, the retail giant revealed plans for a “never the same again” overhaul as it warned the virus would impact trading for the rest of 2020.
Mr Rowe said: “Last year’s results reflect a year of substantial progress and change including the transformative investment in Ocado Retail, outperformance in Food and some green shoots in Clothing in the second half.
“However, they now seem like ancient history as the trauma of the Covid crisis has galvanised our colleagues to secure the future of the business.
“Whilst some customer habits will return to normal, others have changed forever, the trend towards digital has been accelerated, and changes to the shape of the high street brought forward.
“Most importantly, working habits have been transformed and we have discovered we can work in a faster, leaner, more effective way.
“I am determined to act now to capture this and deliver a renewed, more agile business in a world that will never be the same again.”
Also on Wednesday, it was revealed inflation is now far wide of the Bank of England’s 2% target, while it is set to drop sharply lower still, with some economists bracing for a near-zero headline rate of inflation by the summer.
The ONS said average petrol prices dropped by 10.4p a litre between March and April – the biggest fall since unleaded petrol records began in 1990 – amid the global oil price rout.
Energy prices also pushed inflation lower as regulator Ofgem reduced its default tariff cap.
Jonathan Athow, deputy national statistician for economic statistics at the ONS, said: “While the coronavirus limited the availability of some goods and services, its effect on prices was more muted.
“Falling petrol and diesel prices, combined with changes to the domestic energy price cap were the main reasons for lower inflation in April.
“Games, toys and hobbies saw rising prices, perhaps as people occupied their time at home.
“Food prices grew no more quickly than other goods and services, though fresh vegetables did see stronger rises.”