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As grocers hire extra staff to cope with demand, M&S lags behind

The grocer has not seen a spike in demand due to its focus on fresh food, while the clothing & home section faces more struggles

Marks and Spencer Group PLC -

Marks & Spencer Group PLC (LON:MKS) has been lagging behind its competitors, which are facing unprecedented demand as the UK stockpiles ahead of isolation.

While the likes of Tesco PLC (LON:TSCO), Walmart Inc’s (NYSE:WMT) Asda and Lidl hire extra workers to cope, M&S has attracted less customers due to its focus on fresh food.

READ: Marks & Spencer weak as it suspends dividend, clothing sales dive, food remains strong

The FTSE 250-listed grocer has so far seen benefits on a “small scale” though it expects its home dining offer will drive up sales in the months ahead.

According to Sophie Lund-Yates, an analyst at Hargreaves Lansdown, the joint venture with Ocado Group PLC (LON:OCDO) has come “at an interesting time”.

Although M&S products will be available on the Ocado website only as of the autumn, analysts believe the coronavirus outbreak has made consumers keener to do their food shopping online.

Earlier this week, Berenberg said platforms such as Ocado are “the future”.

READ: Ocado “primed to capitalise”, says Berenberg, other grocers need to keep up

Food aside, M&S’s already struggling clothing & home business is now facing further challenges like all other retailers.

The firm announced cuts on Friday, including the suspension of the dividend to save £130mln, while capital expenditure was reduced to £80mln from £400mln - though more may come.

“If less stock is shifted and the group is left with piles of inventory it will need to slash prices in order to sell it at a later date,” said Lund-Yates.

As its clothing offering is less seasonal and more focused on “core wardrobe items”, the analyst expects “slightly more defensive” sales than its competitors, although it will not offset the dramatic decline in footfall.

Shares dropped 5% to 109.6p on Friday afternoon.

Quick facts: Marks and Spencer Group PLC

Price: 148.1 GBX

LSE:MKS
Market: LSE
Market Cap: £2.9 billion
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