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M&S HAlf year results

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daveh
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M&S HAlf year results

#2034

Postby daveh » November 8th, 2016, 8:20 am

Can be found here:

www.investegate.co.uk/article.aspx?id=2 ... 5572O&fe=1

Summary

· Good progress against strategic priorities set out in May.

· As expected, underlying profits down in the half due to lower Clothing & Home sales. Non-underlying items include significant charge relating to pension changes.

· Proposal to focus International business on a franchise model, exiting our loss-making owned business across ten markets, at a non-underlying cost of £150m-£200m over the coming 12 month period, thereby eliminating annual losses of £45m.

· Five-year plan to improve productivity of UK Store Estate by repositioning c.25% of Clothing & Home space with costs of c. £50m per annum for the first three years and continued rollout of our Simply Food stores. Total number of M&S stores will increase.

· Interim dividend maintained.

· Decision not to make an additional return of cash to shareholders in the second half given costs of strategic change and uncertain market conditions.

Shareholder returns

We have continued to improve our investment disciplines and remain committed to a strong balance sheet and maintaining an investment grade credit rating. We are announcing an unchanged interim dividend of 6.8p today. We returned £74.5m to shareholders in the first half in the form of a special dividend. However, given the potential cash costs associated with our strategic changes and uncertain market conditions we believe it is prudent not to make an additional return of cash to shareholders in the second half under our enhanced shareholder returns programme.

Dividend:
6.8p paid 13jan17 ex 17Nov16 to holders on the register 18Nov16

Raptor
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Re: M&S HAlf year results

#2039

Postby Raptor » November 8th, 2016, 8:36 am

Market seems to like the news up 1.8% at the moment.

Raptor.

Arborbridge
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Re: M&S HAlf year results

#2048

Postby Arborbridge » November 8th, 2016, 9:03 am

I've been having doubts about MKS for about a year now - I'm really ambivalent. On the one hand, here's an old warhorse which keeps surviving and will hopefully adapt. I'm a believer in not flitting from one share to another, but leaving it to management. So far, MKS has returned something around the average of my portfolio, and one might say that's fair enough. Keep it, add to it if the share price dips, and stay sanguine.

But, the ship keeps losing its way in the fog, or so it seems. First we are investing abroad, then we are withdrawing, then investing abroad, and now scaling back. We keep having fresh inputs into women's fashion, but however many bright and cheerful ideas come out, critics still think the designs are dull and frumpy (the UK critics seem to have a mind set over MKS, always the whipping boy).
Now the latest idea seems to be, retreat on clothing and household and invest in food. If this carries on, MKS will be just another supermarket, and I already have enough trouble in that direction!

It would be interesting to have the input from someone like Terry, a wise and level headed investor who has a perspective going back many years on MKS. Will he be investing more if MKS rises to the top of his table?

My gloomy stance this morning, notwithstanding, on balance, I would probably follow my usual HYP routine and top up if the chance arises, which it may soon. However, the temptation to realise my capital while it is still in profit and go elsewhere is extremely strong just now and it wouldn't take much to tip me the other way on this one.

self doubting Arb.

Darka
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Re: M&S HAlf year results

#2057

Postby Darka » November 8th, 2016, 9:34 am

I too have doubted M&S for some time and having seen the share price slip since January (and along with it the capital gains I'd made over the years...) I decided to sell my holding and exit the supermarket/retail sector completely.

Too many competitors, too little profit margin and too many mistakes - I've topped up on other share which I believe will do better over the long term.

None of my supermarket/retail shares turned out to be a success.

regards,
Darka

toofast2live
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Re: M&S HAlf year results

#2100

Postby toofast2live » November 8th, 2016, 11:11 am

IMO they are going in the right direction. MKS is no more about knickers. It's about a speciality food retailer, a la Waitrose with some home furnishings and clothes tacked on to the side.

The problem, as always, is can management execute the strategy? In this case I believe they can as MKS is indomitable in its chosen food niche. However the skills to turnaround the clothing rump remain somewhat underwhelming, so my view would be to ditch everything but food and excel in that product category.

Having said all that I have an instinctive dislike for general retailers who are subject both to consumer whims and economic cycles. So while MKS remain a general retailer rather than a focused speciality food retailer which is their strategic strength, I'm out.

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Re: M&S HAlf year results

#2107

Postby Arborbridge » November 8th, 2016, 11:20 am

I'm not even sure what is wrong with MKS's clothing offer. Years ago. when everyone was complaing their lines were dull and black, so was Next's, equally so. Then they jazzed everything up and we had jolly, bright spring like colours, and people still complain.

I just have a feeling that whatever happens, there is an idee fix in the public mind about MKS clothes - critics have an idea and they keep repeating it even if the game has changed. Like Trump calling Hilary a criminal - say it often enough and it becomes a fact.

BTW I've tried Next clothes and they just don't fit me! But Marks' do - I've just realised I'm sitting here typing whilst wearing Marks trousers, pants, socks, shirt and sweatshirt.
Arb.

daveh
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Re: M&S HAlf year results

#2111

Postby daveh » November 8th, 2016, 11:23 am

M&S is near the top of my HYP topup spreadsheet (which I have only recently downloaded) and has been sitting at no. 1 or 2 for months. But I'm ambivalent about buying them. Profit seems static or falling. Food is doing well, but clothing/household is perennially a poor performer. They are down 10% over 8 years I've owned them, but have paid out a good sum in dividends to make up for that. Their local store is tired and cluttered in the clothing section, though the food section seemed Ok when I was last in - which isn't often.

They seem to have a lot of goodwill from the public, but they don't seem to be able to translate that into clothing and household sales. So I'm not sure whether I will top them up - they have a decent yield and are below half the median value of my holdings, but are we looking at a divi cut down the line if they can't start to grow profits?

I may end up increasing my holding in IAPD (Asia/Pacific dividend ETF) to increase my non UK diversification. Or perhaps shell/BP or Lloyds (ordinaries or prefs) all of which are high in the HYPTUSS top up order and have a similar or higher yield.

88V8
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Re: M&S HAlf year results

#2131

Postby 88V8 » November 8th, 2016, 12:10 pm

Our local garage is replacing a SPAR with an M&S.
I fear the brand is being devalued.
They risk becoming just another food retailed with margins to match.
Used to hold.
Don't
Won't.

V8

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Re: M&S HAlf year results

#2196

Postby Raptor » November 8th, 2016, 1:56 pm

I never use M&S for food shopping as they are next door to a huge TESCO's, but always check the clothing out and use their bank for foreign currency as they do a deal for M&S cc holders. Whenever I am in there the food section is always busy and the cafe is at capacity, the rest of the store is usually quiet but I do like their homeware section for a browse (beats Tescos for both homeware and clothing, IMHO). Across the way is a "large" NEXT and I have started to use them more for cloths as they seem to fit me better than M&S, probably due to my "slim" size. Not sure about the "garage" side of it, but I will say that the local Tesco's in a garage near me barely ticks along, so not sure how viable any of them are really.
To be honest whenever I am abroad and see an M&S I am drawn to it and they always seem to be busy, so they must be doing something right. Getting rid of or downsizing shops in areas where trade has dropped seems logical and concentrating abroad on the more successful areas is a must.
M&S have been up there in my HYPTUSS for a while, but either not the top selection or by the time I get the money to buy they have slipped.

I hope they do not become "a food retailer" first as margins in "food" are really tight nowadays.

Raptor. (holds TSCO and MKS).

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Re: M&S HAlf year results

#2367

Postby grimer » November 8th, 2016, 6:52 pm

I have an aversion to the retail sector generally. I'm not a big shopper and prefer to buy online where possible. A relative used to work at M&S and gets a 20% discount. I also get 7% via work and the two discounts can be used together. This leads to a bit of M&S shopping, some regretted. We bought a sofa earlier this year and it is already losing its shape.

I'm not sure the company is going on the right direction. I went in a month ago and it was exactly the same range as last year (and the year before that) - woolen jumpers, etc. Nothing offensive, but nothing I wanted.

I think it is rather stagnant and relying upon late middle aged / retired women for clothing. Although they have the young professional market for food. Can they ever make a transition to young professional clothing without a major hit to profits? It would be such a brave move without any guarantees of success. But if they leave it too long their customer basis will quite literally die away.

Not for me.

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Re: M&S HAlf year results

#2490

Postby Ivyrobert » November 8th, 2016, 9:40 pm

I sold out of my shareholding this morning. They have had too many attempts to change and still their clothing results slide.
Even buying back in at the lower level doesn't seem attractive. They will change people again and I wish the brand well.


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