Marks and Spencer Group PLC (MKS)

[idpickering]

Final Results

Here; https://www.investegate.co.uk/marks---3 ... 00078064Z/

[monabri]

Well... THAT's a good title for the announcement! ( "NEVER THE SAME AGAIN - FORGING A RESHAPED M&S").

[idpickering]

Trading Update for 19 Weeks To 14 August 2021

Based on trading in the 19 weeks to 14 August 2021, M&S is today updating the market on the resulting improvement in its sales performance and profit delivery. At the start of the year, continued restrictions across large parts of the M&S store portfolio meant that the trading outlook was highly uncertain. Since then, M&S has seen an encouraging performance providing confirmation that the transformation programme is on track.

Food revenue in the period has outperformed, increasing 10.8% on last year and 9.6% on 2019/20. Core categories and retail park locations have traded strongly. Hospitality and franchise are progressively improving, although remain below 2019/20 levels due to reduced footfall and the slow return to more normal work patterns. Despite the variable location performance, overall trading has been ahead of the market. To date, cost reduction programmes are helping to mitigate cost inflation and disruption in the supply chain, and the cost of increased colleague absence in the period.

Clothing & Home has seen a good recovery in its performance. Revenue is up 92.2% on last year and down just -2.6% on 2019/20. The change in our approach to trading, including more focussed ranges, fewer promotions and a substantially smaller summer sale, has resulted in full price sales up c.9% on 2019/20. The pivot to online has continued with store sales down -19.8% on 2019/20 as many locations remain in slow recovery from the pandemic, although retail parks have outperformed. MS2 has continued its momentum as the business improves its online and data capability. Clothing & Home online sales are up 61.8% on 2019/20 and comprised c.35% of total Clothing & Home sales, and our guest brands and Sparks programme are performing well.

International revenue is up 39.7% on last year and down only -5.2% on 2019/20 despite the impact of lockdown in India in the early part of the financial year and substantial Brexit related effects on the supply of Food to our businesses in the Republic of Ireland and France. The push into global online remains promising with sales up c.40% on last year and more than doubling on 2019/20.

Outlook

Although there has likely been an element of pent-up consumer demand in trading to date, we believe this performance provides strong confirmation of the beneficial effects of the last 18 months "Never the Same Again" changes. Despite this, there remains substantial uncertainty as to the continued strength of consumer demand, as well as disruption in both supply chains and consequent pressures on costs and margin.

However, assuming no further Covid-related restrictions on trading, at this early stage we expect adjusted profit before tax for the year to be above the upper end of previous guidance of £300-350m. We will report half year results on 10 November 2021 at which point we will provide more detailed financial guidance for the balance of the year.

https://www.investegate.co.uk/marks---3 ... 00092463J/

[idpickering]

HALF YEAR RESULTS FOR 26 WEEKS ENDED 2 OCTOBER 2021 “TRANSFORMATION AND COVID BOUNCE BACK DRIVES STRONG PERFORMANCE”

Strong financial results
•Profit before tax & adjusting items of £269.4m (2019/20, £176.3m)
•Profit before tax of £187.3m (2019/20, £158.8m; 2020/21, loss of £87.6m)
•Food sales1 up 10.4%, sales ex hospitality and franchise2 up 16.9%
•Food operating profit before adjusting items of £143.7m (2019/20, £92.2m)
•C&H sales1 down 1%, full price sales1 up 17.3%
•C&H online sales1 growth of 60.8%, now 34.4% of total C&H sales. Store sales down 17.6%
•C&H operating profit before adjusting items of £156.2m (2019/20, £109.6m)
•Net debt reduced to £3.15bn down 22.6% on 2019/20.

Underlying improvements in all main businesses
•M&S Food growing market share with consistent strong quality and improved value perceptions
•Ocado Retail opens 3 new CFCs. Planned capacity growth over 50% since M&S investment
•C&H increased value and style perception. Market share growth across key categories and channels
•MS2 driving strong online growth, record active customers and increased retention
•UK pipeline includes 20 full line stores, enabling 3 full line closures in H1
•International rebounding despite lockdowns, trading restrictions and EU border costs

https://corporate.marksandspencer.com/m ... tober-2021

[daveh]

The market seems to like it, up about 12% today. Still on the naughty step for me as no dividend. I'll see how it goes, will the dividend be restored next year (seems unlikely this year from the statement) and if not it will go on the to sell list. The one area of interest counting towards retaining it is the Ocado tie up - interesting to see how that goes and if it leads to a re-rating of MKS's share price.

[kempiejon]

The market seems to like it, up about 12% today. Still on the naughty step for me as no dividend. I'll see how it goes, will the dividend be restored next year (seems unlikely this year from the statement) and if not it will go on the to sell list. The one area of interest counting towards retaining it is the Ocado tie up - interesting to see how that goes and if it leads to a re-rating of MKS's share price.

Daveh, I agreed that Ocado does perhaps make MKS it more interesting, a few years back before covid I was looking at OCDO as a potential purchase, never did buy. I think Covid exhuberation on all delivery services pushed the share price ahead then but I ight be mis remembering they had some logistic problems, was it a fire or a software problem? Perhaps OCDO has more promise than MKS over the next decade, I doubt MKS will see former glory return.

[dealtn]

Half Year Report

https://www.investegate.co.uk/marks---3 ... 00058752R/

Lots to read in the interesting RNS which is recommended as many (most) see MKS with a rear view perspective and comparisons with the "Glory Days" of the past. Some highlights:-

Net Debt down to just £820mio

Free Cashflow +£288mio

Results driven by good food growth, particularly in Ocado Retail which has opened 3 Customer Fulfillment Centres with more capacity planned.

Clothing and Home has increased market share, both online and offline.

Store portfolio looks on track with closures leading to higher sales in nearby locations and "full line" implementation pipeline growing.

"Trading for the first four weeks of H2 has been consistent with growth rates reported in Q2 and ahead of plan and we expect the strong demand relating both to the bounce back and improved customer perception to be sustained in the near term. However, well publicised cost pressures will become progressively steeper increasing the importance of our productivity plans, store rotation and technology investment in the coming year. Taking these factors into account and assuming there is no further acute pandemic related disruption, our central case is for profit before tax and adjusting items for the year to be ahead of expectations and in the region of £500m."

Pension remains in surplus at £734mio (soon to be big enough to more than offset the net debt!). Furthermore 80% of pensioner cash flow liabilities are covered by insurance.

Very happy they continue to use the cash generated by the business to invest internally in growth markets and restructuring, rather than simply pay out unnecessary dividends.

The market appears very happy with the update, with shares up 15% today to around 225p, but still with plenty of room to target 5 year highs of 380pish, let alone all time highs of close to 600p.

[idpickering]

M&S Signs New RCF Linked to Net Zero Targets

Marks & Spencer has agreed a new £850m Revolving Credit Facility. The terms of the new Revolving Credit Facility run until June 2025 and replace the existing facility, which was due to mature in April 2023.

Following the reset of its Plan A programme in September, the new facility is linked to the delivery of its net zero scope 3 target by 2040. Under the terms of its new credit facility, M&S will benefit from a lower interest rate if it delivers targets aligned to its net zero roadmap . The designated metrics span the M&S value supply chain to support its scope 3 net zero goal. M&S has worked with BNP Paribas as its sustainability coordinator and the structuring of this facility aligns with the guidelines set out by the Sustainability-Linked Loan Principles, published by the Loan Market Association in May 2021.

https://www.investegate.co.uk/marks---3 ... 30037409V/

[csearle]

I really like the notion of a firm getting a better financial deal if it meets its environment-targets. What I don't understand is what incentive a bank would have for giving a client a better financial deal if the client meets its environment-targets.

Anyone have any idea?

Chris

[Pendrainllwyn]

I really like the notion of a firm getting a better financial deal if it meets its environment-targets. What I don't understand is what incentive a bank would have for giving a client a better financial deal if the client meets its environment-targets.

Anyone have any idea?

I don't know for sure why this bank is behaving in this way but banking regulators are increasingly focusing on operational risk in addition to market and credit risk and some banking regulators are now including climate change in operational risk. They expect banks to manage climate change risk, for example ensure they manage their exposure to counterparties whose creditworthiness may suffer due to climate change, and have appropriate governance around it. Charging lower rates if environmental targets are met might be one way a bank might manage climate change risk and demonstrate that governance. The benefit may be more obvious when lending to other industries.

Perhaps the bank in question thinks it will appeal more to investors by demonstrating its ESG credentials and may think it will increase its chances of getting included in ESG related indices if it behaves in this way.

It is a competitive labour market and the bank may believe it will be a more attractive employer in a world where young people increasingly stress that they want to work for employers who do the right thing and give back to society.

And finally, the bank may believe its long term profitability will be enhanced if the potential negative consequences of climate change are avoided or reduced.

Pendrainllwyn

[Dod101]

I really like the notion of a firm getting a better financial deal if it meets its environment-targets. What I don't understand is what incentive a bank would have for giving a client a better financial deal if the client meets its environment-targets.

Anyone have any idea?

Chris

Well it should get some ESG warrior types off its back at AGMs and so on and generally put it in a better light with investors. This stuff is getting real!

Dod

[Dod101]

I really like the notion of a firm getting a better financial deal if it meets its environment-targets. What I don't understand is what incentive a bank would have for giving a client a better financial deal if the client meets its environment-targets.

Anyone have any idea?

Chris

Well it should get some ESG warrior types off its back at AGMs and so on and generally put it in a better light with investors. This stuff is getting real!

Dod

Just to expand on that a little. I attended the HSBC AGM in I guess it would have been in these prepandemic days of 2019 when a good deal of the time set aside for shareholders' questions was taken up by bright young ladies jumping up at every opportunity and asking a pre prepared question about the financing of coal and other fossil fuels instead of promoting green energy by financing windfarms and so on. This sort of deal will provide them with slightly better credentials. 'tis the way of the world I am afraid.

Dod

[csearle]

Thank you both for those plausible explanations. C.

[Arborbridge]

I really like the notion of a firm getting a better financial deal if it meets its environment-targets. What I don't understand is what incentive a bank would have for giving a client a better financial deal if the client meets its environment-targets.

Anyone have any idea?

Chris

Well it should get some ESG warrior types off its back at AGMs and so on and generally put it in a better light with investors. This stuff is getting real!

Dod

Just to expand on that a little. I attended the HSBC AGM in I guess it would have been in these prepandemic days of 2019 when a good deal of the time set aside for shareholders' questions was taken up by bright young ladies jumping up at every opportunity and asking a pre prepared question about the financing of coal and other fossil fuels instead of promoting green energy by financing windfarms and so on. This sort of deal will provide them with slightly better credentials. 'tis the way of the world I am afraid.

Dod

Don't be afraid! Maybe it's a good thing? It might also show that protest can bring change without violence.
And I don't agree with the derogatory " bright young ladies jumping up at every opportunity and asking a pre prepared question ". For a start, there are plenty of young men involved in green issues (my grandchildren and his friends); thanks goodness they are "bright" rather than stupid; and it's a good thing to have your question "properly prepared"; and really good to take advantage of every opportunity to win the point! Thanks goodnes, then, for bright young people trying to defend their future. Better than seeing a boring old man rambling on defending the status quo, perhaps?

Arb.

[Dod101]

Well it should get some ESG warrior types off its back at AGMs and so on and generally put it in a better light with investors. This stuff is getting real!

Dod

Just to expand on that a little. I attended the HSBC AGM in I guess it would have been in these prepandemic days of 2019 when a good deal of the time set aside for shareholders' questions was taken up by bright young ladies jumping up at every opportunity and asking a pre prepared question about the financing of coal and other fossil fuels instead of promoting green energy by financing windfarms and so on. This sort of deal will provide them with slightly better credentials. 'tis the way of the world I am afraid.

Dod

Don't be afraid! Maybe it's a good thing? It might also show that protest can bring change without violence.
And I don't agree with the derogatory " bright young ladies jumping up at every opportunity and asking a pre prepared question ". For a start, there are plenty of young men involved in green issues (my grandchildren and his friends); thanks goodness they are "bright" rather than stupid; and it's a good thing to have your question "properly prepared"; and really good to take advantage of every opportunity to win the point! Thanks goodnes, then, for bright young people trying to defend their future. Better than seeing a boring old man rambling on defending the status quo, perhaps?

Arb.

Well had you been there (at the AGM) you would know what I mean. They were all apparently bright young ladies and they took up most of the time that might otherwise have been taken up with quizzing the management about the running of the business (which was then a little less successful than it is now) These questioners have probably got no interest in the business or the level of dividends or its investment in China or anything of real relevance to shareholders. I could sense the exasperation of those who did want to ask these questions but I must say Mark Tucker, the Chairman, was very patient and answered all these questions in a very straightforward manner. he probably recognised the questioners from earlier AGMs.

In fact they also turned up at the Unilever AGM held in the same week and which I also attended.

Dod

[dealtn]

I really like the notion of a firm getting a better financial deal if it meets its environment-targets. What I don't understand is what incentive a bank would have for giving a client a better financial deal if the client meets its environment-targets.

Anyone have any idea?

Chris

It's the direction of travel, like it or not.

https://www.bankofengland.co.uk/climate-change

Banks already have their Capital assessed against a climate agenda. The MPC's inflation target now also has a reference to climate, and the transition to net zero.

Google "Mark Carney" and ESG or climate change and you will get 100s of articles on how he (and others with perceived credibility towards the top of the financial system) see the issue and it's relevance to business.

You can argue much of it is virtue signalling, and a financial loss for lenders, but it will be happening more frequently I expect. Shareholders are progressively losing out to other stakeholders in society. Whether that is a good thing or not is a much broader discussion.

[daveh]

Trading statement:
https://www.investegate.co.uk/marks---3 ... 00052834Y/

" Trading over the Christmas period has been strong, demonstrating the continued improvements we've made to product and value. Clothing & Home has delivered growth for the second successive quarter, supported by robust online and full price sales growth. Food has maintained its momentum, outperforming the market over both 12 and 24 months. The market continues to be impacted by the headwinds and tailwinds that we reported in the first half, but I remain encouraged that our transformation plan is now driving improved performance ."

· Food sales increased 12.4%, with sales excluding hospitality and franchise up 16.4%. Retail parks and Simply Food stores continued to outperform. Encouragingly, the larger basket sizes we saw in the first half continued through the Christmas period as customers used M&S for more of their everyday shopping. As a result, M&S was the fastest growing major store-based Food retailer in the period. The business generated its highest ever Christmas sales with December growth in line with the performance for the quarter. In addition, although not included in these numbers, M&S products performed strongly on Ocado.com, representing c.30% of baskets in December.



· Clothing & Home sales increased 3.2%. Full price sales grew by 45% as we maintained our trusted value trading stance, reducing the amount of product sold on promotion by 66% and stock into sale by 21% compared to 2019/20. Online sales continued to be strong, with growth of 50.8% supported by substantial expansion of in-store fulfilment. Store sales were down 10.8% on 2019/20 with retail parks up, continuing to outperform stores in city centres.



· International sales increased 5.1%, with online sales more than doubling. Performance was driven by Clothing & Home growth in the Republic of Ireland and key markets such as India after Covid related restrictions were eased. In addition, we generated strong growth through online marketplaces and in franchise shipments to the Middle East.



· During the period, the Group further strengthened its balance sheet and liquidity position. We repaid the December 2021 bond maturity through cash and signed a new £850m Revolving Credit Facility maturing in June 2025. In addition, we disposed of two warehouses for a total cash consideration of £42.5m.



· In November, we indicated that we expected the strong trading we had seen in the early part of the quarter to be sustained. As a result of our performance in the balance of the period, we are more confident of our ability to deliver the increased guidance we set, and now expect full year profit before tax and adjusting items of at least £500m. This assumes no further material restrictions or lockdowns.

[daveh]

Changes at the top.
https://www.investegate.co.uk/marks-and ... 07313853E/

M&S APPOINTS STRONG NEW LEADERSHIP TEAM TO ACCELERATE PROGRESS IN TRANSFORMATION



Following the announcement that Steve Rowe is standing down as Chief Executive Officer at the company's preliminary results on 25 May, M&S is now moving to implement its planned succession process.

Stuart Machin will become Chief Executive and will take on responsibility for day-to-day leadership of the business and the Executive Committee. He will continue to have oversight of his current portfolio of responsibilities, which includes the leadership of our Food business, as well as Operations, Property, Store Development and Technology. He will also take on responsibility for HR and Corporate Communications and will join the PLC Board with effect from 25 May.

Katie Bickerstaffe will become Co-Chief Executive with a particular focus on driving the global omnichannel, digital & data future for the business. She will retain her existing portfolio including responsibility for Clothing & Home, MS2, International and Financial Services. Katie will also re-join the PLC board with effect from 25 May where she was previously a non-executive director.

Eoin Tonge becomes Chief Strategy & Finance Officer. In addition to his current responsibilities, he will play an enhanced role in leading the future development of the business. He will also take on oversight of Plan A and remains on the PLC Board.

M&S is now embarked on the second phase of its transformation programme, "Shaping The Future." The Board's view is that under the current team, the business has made remarkable progress and that continuity of strategy and leadership is advantageous. Bringing together these three outstanding leaders will provide the stability, pace and bandwidth required to accelerate the pace of change.

[Dod101]

Changes at the top.
https://www.investegate.co.uk/marks-and ... 07313853E/

M&S APPOINTS STRONG NEW LEADERSHIP TEAM TO ACCELERATE PROGRESS IN TRANSFORMATION



Following the announcement that Steve Rowe is standing down as Chief Executive Officer at the company's preliminary results on 25 May, M&S is now moving to implement its planned succession process.

Stuart Machin will become Chief Executive and will take on responsibility for day-to-day leadership of the business and the Executive Committee. He will continue to have oversight of his current portfolio of responsibilities, which includes the leadership of our Food business, as well as Operations, Property, Store Development and Technology. He will also take on responsibility for HR and Corporate Communications and will join the PLC Board with effect from 25 May.

Katie Bickerstaffe will become Co-Chief Executive with a particular focus on driving the global omnichannel, digital & data future for the business. She will retain her existing portfolio including responsibility for Clothing & Home, MS2, International and Financial Services. Katie will also re-join the PLC board with effect from 25 May where she was previously a non-executive director.

Eoin Tonge becomes Chief Strategy & Finance Officer. In addition to his current responsibilities, he will play an enhanced role in leading the future development of the business. He will also take on oversight of Plan A and remains on the PLC Board.

M&S is now embarked on the second phase of its transformation programme, "Shaping The Future." The Board's view is that under the current team, the business has made remarkable progress and that continuity of strategy and leadership is advantageous. Bringing together these three outstanding leaders will provide the stability, pace and bandwidth required to accelerate the pace of change.

I am not a shareholder but it sound like management by committee with Co Chief Executives. Good luck with that.

Dod

[idpickering]

Full Year Results for 52 Weeks Ended 2 April 2022.

Strong all-round performance
▪ Profit before tax and adjusting items of £522.9m (2019/20 £403.1m).
▪ Statutory profit after tax of £309.0m (2019/20 £27.4m).
▪ Food growth of 10.1%, ex hospitality and franchise sales1 up 14.7%.
▪ M&S share of Ocado Retail net profit £13.9m including £7.2m net exceptional costs.
▪ C&H sales up 3.8%. Online growth of 55.6%, stores down 11.2%.
▪ Strong cash flow, reducing net debt excluding lease liabilities by £1.0bn to £420m.
Business well positioned for inflationary headwinds and the next phase of transformation
▪ M&S Food outperformance supported by record quality and improved value perception.
▪ Ocado Retail basket size normalised as anticipated, transitioning to rapid capacity growth.
▪ Reshaped C&H range and value commitment delivering full-price sales growth of 28.5%.
▪ Online C&H sales now 34% of UK C&H sales and nascent brands platform established.
▪ Sparks has grown to 15m members, fuelling data and personalisation drive.
▪ International online retail sales over £250m vs £100m in 2019/20.
▪ Increased store rotation pipeline in both Food and C&H; new format stores performing well.
Steve Rowe, CEO: "When I took over the reins at M&S six years ago, I committed to tackling the underlying issues that
had eroded the strength of the business and building the foundations for future growth. For me, what is important about
these results is not just the restoration of profit and strong cash flow; it is that they demonstrate that M&S has
fundamentally changed. While there is much more to do, the business has moved beyond proving its relevance and has
the opportunity for substantial future growth. It has been my privilege to be the steward and shopkeeper of this fantastic
business and extraordinary brand at such an important stage in its history. The changes we have delivered are down to
the commitment and hard work of colleagues across the business, and I am delighted to hand the baton on to Stuart,
Katie and Eoin to lead the next phase.”

https://corporate.marksandspencer.com/d ... l-2022.pdf

Ian.