British retailer Marks and Spencer has revealed that Brexit cost the company over £16 million in tariffs, administration and supply chain expenses during the 52 weeks up to 27th March 2021.
The long-established supermarket and clothing chain published the figures as part of its annual financial results document, titled “Never The Same Again – Forging A Reshaped M&S”.
M&S said the following estimated cost impacts were incurred by the Group in 2020/21 as a result of Brexit:
According to the retailer, the administrative costs include additional supply chain costs:
Administrative costs include additional supply chain costs at the Motherwell and Faversham depots as well as costs of a digital track and trace platform, additional variable cost per tray, veterinary certification costs and the one-off costs of change. Tariffs relate to duty on exports of Clothing & Home and elements of the Food catalogue into the EU. In addition, the Group saw adverse trade impacts including the restriction of trade on certain products, port delays and increased operational complexity reducing availability.
The company said that it had had to reconfigure trading with its EU businesses to reflect the challenges of exporting to the EU. As the above table shows, in the last financial year Marks and Spencers’ International business incurred Brexit related costs of £6.2m.
In its statement, Marks and Spencers added that the Brexit situation is “unlikely to improve in the near term” and that the company would have to reconfigure its trading with its EU businesses:
The most challenging effect of the Brexit deal is to make the supply of fresh and chilled product, especially prepared food, into the EU very lengthy and bureaucratic creating an enduring impact on availability and trading costs. This situation is unlikely to improve in the near term and we therefore need to reconfigure trading with our EU businesses. The most significant impact is on our Food operations in the island of Ireland and we are implementing multiple medium-term solutions to stabilise the business in both the North and the Republic. We have already modified food export into the Czech Republic and are working with our partners in France to review the model. While these operations are relatively small in the context of the Group, changes to our EU businesses as a result of Brexit related costs may result in future restructuring charges.
Despite the challenges presented by Brexit, covid (which understandably had a severe impact), as well as changing tastes and consumer habits, the M&S group’s proﬁt before tax & adjusting items was £41.6m in the 52 weeks ended 27th March 2021.
Commenting on the figures, Steve Rowe, CEO at Marks & Spencer, said the results showed M&S had delivered resilient trading performance:
In a year like no other we have delivered a resilient trading performance, thanks in no small part to the extraordinary efforts of our colleagues. In addition, by going further and faster in our transformation through the Never the Same Again programme, we moved beyond fixing the basics to forge a reshaped M&S. With the right team in place to accelerate change in the trading businesses and build a trajectory for future growth, we now have a clear line of sight on the path to make M&S special again. The transformation has moved to the next phase.
The full report can be read here.