Retailer Results / M&S



Trading Update
26 Weeks to 1 October 2016

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Trading Update
13 Weeks to 2 July 2016


Key Numbers
• Food sales +4.0 per cent (LFL -0.9 per cent)
• Clothing and Home sales -8.3 per cent (-8.9 per cent LFL)
• M& sales (memo only) +0.5 per cent
• Total UK sales -1.1 per cent (LFL-4.3 per cent)
• International sales +0.7 per cent
• Group sales +1.3 per cent


• Group sales were up 1.3 per cent in the 13 weeks to 2nd July.
• Food sales rose by 4.0 per cent with LFL sales down 0.9 per cent of which 0.5 per cent was partly due to Easter timing. M&S strongly outperformed the food market and continue to leverage volume growth to reinvest in price. New Simply Food stores continue to perform ahead of expectations.
• Clothing & Home sales were down by 8.3 per cent with LFL sales down by 8.9 per cent in a weak market. There was a reduction in the number of promotional events during the quarter, including just one ‘cyber day’ compared with six last year.
• International sales were up 0.7 per cent at constant currency and rose 6.1 per cent on a reported basis.
• Full year guidance remains unchanged.

Steve Rowe, Chief Executive, said: "A key part of our recovery plan for Clothing & Home is lowering prices and reducing promotions. As a result, we ran fewer price promotions while continuing to lower prices to deliver real value to our customers, and moved the summer sale to July. We knew our actions would reduce total sales but we are seeing some encouraging early signs. Our Food business continues to strongly outperform a deflationary market, with LFL sales slightly down when adjusted for Easter timing.

"As highlighted in May, consumer confidence weakened in the run up to the EU referendum. While it is too early to quantify the implications of Brexit, we are confident that our strategic priorities and the actions we are taking remain the right ones to deliver results for our customers and our business."



Full Year Results
53 Weeks to 2 April 2016


• Group revenue £10.6bn (+2.4 per cent y/y)
• Underlying profit before tax £689.6m (+4.3 per cent y/y)
• Profit before tax £488.8m (-18.5 per cent y/y)


Continued strong growth in Food as M&S outperformed a competitive and evolving market. Another 75 new Simply Food stores were opened which are performing ahead of expectations.

Clothing & Home gross margin up 245bps; sales performance unsatisfactory and suffering from unseasonable weather. However, the revival efforts in the clothing business are not resonating with the core customer base.

Continued difficult trading conditions in International - operating profit down 39.6 per cent to £55.8m.

Tight control over cost and capital - free cash flow pre-shareholder returns of £539.3m and operating costs +1.8 per cent.

£451.7m returned to shareholders including: £301.7m dividend and £150m buy back. In addition a special dividend of 4.6p per share (or £75m) announced for the first half of 2016/17.

Steve Rowe, Chief Executive, said: "M&S is a great business with a strong customer base and loyal employees and we have much to be proud of. We also know that we have lots of opportunities to improve and be better for our customers, our employees and our shareholders. We are putting customers right at the heart of our business.

"Our results last year were mixed. We continued to outperform on Food but we under-performed on Clothing & Home sales. This is not satisfactory and today we are outlining our initial plans to address the issues and to position Marks & Spencer to deliver profitable sales growth.

"We are clear on the actions needed to recover and grow Clothing & Home, which is our top priority; to continue to grow our Food business; and to focus on driving profitability. We are investing to re-establish our price position by sharpening prices and to enhance service by putting more employees into our stores.

"These actions, combined with the difficult trading conditions, will have an adverse effect on profit in the short term. We are, however, confident that our commitment to delivering the right product, price and service will help return Clothing & Home sales to growth. This, together with continued momentum in Food, will provide us with a solid base from which to build a long term sustainable business."



Trading Update
Q4 2015 - 13 Weeks to 26 March 2016


Key Numbers
• Total UK sales +1.6 per cent
• LFL sales -1.1 per cent
• International sales +3.8 per cent

• Total sales up +4.0 per cent
• LFL +0.0 per cent

Clothing and Home
• Total sales -1.9 per cent
• LFL -2.7 per cent


Overall, group sales were +1.9 per cent for the quarter, exceeding expectations. Food outperformed a highly competitive market and new store openings continued to drive strong sales growth. In the year, 80 new stores were opened which brought M&S market share to 4.3 per cent.

Seasonal events, such as Mother’s Day, performed well and the business continues to invest in new product lines to meet these occasions.

Clothing and Home, which fell 1.9 per cent during the period, suffered from tough competition and price deflation in the market. Nevertheless, Home has been one of the strongest performing sectors throughout the period and M&S have not been able to capitalise on a growing market. Clothing was also tough for the retailer but the market has been subdued in recent months and their decline in sales reflects difficult market conditions. However, in context of longer term performance, Clothing is likely to have held its ground against competitors.

Autograph sales were up 10 per cent. The proportion of sales on promotional discount were also reduced. However, as flagged at quarter three, more stock went into sale.

M& delivered reasonable performance but still lagged overall market trends.

Steve Rowe, Chief Executive, said: “I am very proud and privileged to be leading M&S. We are focused on getting even closer to our customers and putting them at the heart of everything we do.

“We had a mixed performance in the final quarter of the year. Our Food business once again outperformed the market by c.3.5 per cent pts. Although the sales decline in Clothing and Home was lower than last quarter, our performance remains unsatisfactory and there is still more we need to do.

“Turning around our Clothing and Home business by improving our customer offer is our number one priority. I will update you on my thoughts on the business in May.”



Trading Update
13 weeks to 26 December 2015


• Total sales up +3.7 per cent
• Like-for-like up +0.4 per cent LFL
• Record sales for food, +17 per cent in the key Christmas week

General Merchandise
• Total sales down -5.0 per cent
• Like-for-like sales down -5.8 per cent
• M& up +20.9 per cent
• Gross margin up significantly with less discounting
• Margin guidance upgraded to the top end of the guided range of +200 to +250bps
• Strong cash generation
• Operating costs guidance improved from c.+4.0 per cent to c.+2.5 per cent
• Ongoing share buyback programme, £111m of shares bought to date


After a challenging Christmas period for M&S, Marc Bolland, CEO, has announced he is leaving the business. Mr Bolland will be replaced by Steve Rowe, the current executive director of General Merchandise.

These figures show a tale of two halves with the Food business significantly outperforming Non-Food. In the all-important Christmas week, food sales were up +17 per cent on the previous year, making this the best Christmas ever for this side of the business. Overall, total Food sales rose by +3.7 per cent for Q3 2015.

In contrast, General Merchandise faced tough challenges from unseasonably mild weather, which impacted the clothing business, and sourcing issues affected availability. Widespread discounting intensified throughout December with the sector attempting to shift heavy winter-wear during mild weather. However, M&S held back on deep promotions and, while there was an adverse impact on sales, gross margin was protected. Nevertheless, total sales fell by -5.0 per cent in Q3 2015 suggesting that problems with the Non-Food business are more deep-rooted and consumers continued to shun new ranges.

M& performed strongly. The new loyalty club, Sparks, was successfully launched with over 3.3m customers joining since the launch 11 weeks ago. Customer traffic was up over the period which translated to a +20.9 per cent increase in online sales in the third quarter.

Marc Bolland, Chief Executive, said: “M&S had an excellent Christmas in Food, delivering record Christmas sales and strongly outperforming the market. General Merchandise sales were disappointing. We continued to prioritise gross margin and held back from the heavy discounting seen across the market in the run up to Christmas. As a result we now expect GM gross margin to be at the top end of the guided range.”

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