British retailer Marks & Spencer (MKS.L) on Wednesday reported an 88% slump in full-year profit, reflecting a collapse in clothing sales due to the COVID-19 pandemic, and warned investors not to expect a dividend in the current year.

But it said it was making progress with its turnaround plan, had traded well in the early weeks of the 2021-22 year and that profits would recover, sending its battered shares up more than 4% in early trading.

M&S, which also sells upmarket food, made a pretax profit before one-off items of 50.3 million pounds ($71.2 million) in the year to April 3, down from the 403.1 million pounds made in 2019-20.

The 137-year old group, one of the best known names in British retail, said like-for-like clothing and homeware sales plunged 31.5%, damaged by multiple coronavirus lockdowns which shuttered stores.

Clothing and homeware sales in stores crashed 56.2%, partly offset by online growth of 53.9%.

In food, where space remained open during the crisis, like-for-like sales rose 1.3%.

On a statutory basis M&S sank to a pretax loss of 209.4 million pounds, versus a profit of 67.2 million pounds in 2019-20.

All UK clothing retailers have been hit hard by the pandemic. Last month Primark (ABF.L) which does not trade online, reported a drop in annual profit of 90%. Next (NXT.L), which has a huge online business, has shown greater resilience but its full-year profit still fell 53%. read more

CEO Steve Rowe has been driving M&S’s latest attempt at a reinvention after decades of failures.

Along with chairman Archie Norman he has focused on transforming the company’s culture, while closing stores, investing heavily in technology and e-commerce, and improving product and value to broaden its appeal.

M&S reckons the pandemic has masked the progress it is making with its turnaround and said it has moved beyond the “fixing the basics” stage.

“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,” said Rowe.

M&S said trading for the first six weeks of the 2021-22 financial year had been ahead of the comparable period two years ago and its central expectations.

It forecast underlying pretax profit to recover to 300-350 million pounds in 2021-22.