The Irish arm of UK retailer Marks & Spencer returned to profit last year despite the twin impacts of Brexit and the pandemic.
Recently filed accounts for Marks and Spencer Ireland Ltd (M&S) show the business made a pretax profit of €31.2 million for the 52 weeks up to April 2nd last year, compared to a loss of €13 million for the preceding period, which was described as a “lost year” financially due the pandemic’s impact on sales and operations.
The company, which employs 1,900 staff across its store network and support centre in the Republic, generated sales of €325 million for the period, up from €294 million previously.
Brexit impact
Gross profit was €117 million, up by €25 million or 27 per cent.
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“Trading conditions were challenging during the year as Covid-19 restrictions prevented us trading Clothing and Home in our stores until May, and our Food business felt the impact of Brexit for the entire year,” the group’s directors said.
Clothing and Home sales in the market increased by 44.7 per cent on the previous year primarily driven by “us having our stores opened for most of the year compared to the previous year, where they were closed for significant periods because of Covid-19 Government restrictions”, they said.
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The company noted that food sales were down by 3.5 per cent on the previous year on account of Brexit and new controls on importing products from Britain.
New import rules and additional paperwork associated with Brexit initially forced the UK retailer to cut 800 product lines in its stores in the Republic, including such items as free-range chicken, orchids or goods containing Parmesan Reggiano
Challenging year
The “long and complex export processes” following Britain’s departure from the European Union have made it difficult to supply the stores from the UK, it said. Border delays made items with a very short shelf life, such as freshly made sandwiches, unsellable.
“Despite the challenging 2022 financial year, we emerged from the pandemic a strong business, but we are also at the end of our ‘fixing the basics’ phase of our transformation,” the directors said.
“On top of the transformation programme, the last four years have seen our business buffeted by a series of external shocks, the pandemic, Brexit and the invasion of Ukraine,” they added.
“As we look to the months ahead, we expect to see a somewhat uncertain macroeconomic climate which could impact consumer real income,” they said.
