'Hibernation' plan for M&S SS20 stock could mean holding it for SS21
May 18, 2020
M&S could be the latest retailer to put part of its SS20 line into ‘hibernation’ until SS21. Ahead of its results announcement on Wednesday, it has emerged that basics and classics — from T-shirts to jeans, office-wear and formal clothing — could be held over to next spring, depending on how clearance and full-price sales go in the weeks and months ahead.
This is Money reported the plan that echoes the strategies of a number of its fashion retail peers.
Several retailers, including multichannel giant Next, have already suggested that SS20 pieces could be held over for a up to a year. This has led several big names to seek extra space to store the large amount of stock they’re currently holding and will have to hold for many months. Next, Primark and Debenhams have all been reported to be looking for extra storage facilities.
But carrying stock over to next year won’t solve all the problems retailers face as the amounts might still only add up to a small percentage of the season’s total stock. Next had said it could hold over around 15% of spring season pieces. M&S hasn’t confirmed its own plan, but This is Money suggested its percentages could be higher than those at Next.
M&S has been trading online during the lockdown and some fashion product has been available to buy in stores that have food halls. But its sales are still down sharply from where they would have been by now. Just how sharply, we’ll discover on Wednesday.
For now though, the company has additional problems apart from surplus stock. Credit rating agency S&P has cut M&S’s bonds to junk status. With a lower credit rating, debt of around $2 billion, and speculation that its rating could be cut further, its borrowing costs could be raised. This would mean servicing its debt becomes more expensive.
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