Marks And Spencer Group Plc · LSE:MKS
Marks And Spencer — Investor Day (October 2022)
30 slides from Marks And Spencer's investor day presentation, Oct 12, 2022
Slide 1: M&S Reshaped
M&S Reshaped 12 OCTOBER 2022 GOODMOVE 1 Go Train Printed Gym Leggings, £32.50
Slide 2: Welcome
Welcome Stuart Machin Chief Executive M&S COLLECTION 2 Feather and Down Puffer Jacket, £119.00
Slide 3: Key Takeaways
Key Takeaways Structural Cost Reduction Building towards c.£400m underlying cost savings from overheads Investing in Trusted Value £200m investment in value across C&H and Food Profitable Growth in Market Share Moving volume into growth categories and channels – capable of margins over 10% in C&H an
Slide 4: Operating Against a Difficult Economic Backdrop
Operating Against a Difficult Economic Backdrop 4
Slide 5: Facing into Significant Cost Headwinds
Facing into Significant Cost Headwinds Market Headwind Impact on M&S Colleague costs up c.7% Wage inflation Further pressure expected in 2023 £40m higher than planned Energy costs Without support, possible headwind over £100m next year Cost price inflation Food cost of goods already under pressure a
Slide 6: Value Becoming Customers' Top Priority
Value Becoming Customers’ Top Priority Market Consumer Behaviour Unprecedented inflation Food Declining market volume Volume growth over summer Clothing & Home Consumers focusing on most relevant categories Consumers seeking value everywhere Overall Value has always been in our DNA 6
Slide 7: However, We Have Built a More Resilient Business
However, We Have Built a More Resilient Business Trusted value in Food Acquired 50% of Relaunched Sparks Store rotation Acquired Gist Promotions halved Ocado Retail Grown to 16m members and renewal 2018 2019 2020 2021 2022 Full price in C&H Doubled capacity at 9m M&S.com customers Invested in value
Slide 8: Food Objective – Profitable Market Share Growth
Food Objective – Profitable Market Share Growth Grow market share by c.1% Deliver a margin around 4% Rigorous category management and tiering Growth in core categories Investing in trusted value Profitably adding space with over 100 new and bigger, fresher Food stores Reset Ocado and building omnich
Slide 9: C&H Objective – Leading Omnichannel Retailer
C&H Objective – Leading Omnichannel Retailer Grow market share more than 1% Deliver a margin over 10% Rigorous category management Growth in Kids, Sport, Home Investing in trusted value Scaling Third Party brands to drive online traffic Omnichannel growth Expanding global reach Leveraging Sparks Str
Slide 10: M&S Reshaped for Growth and Value Creation
M&S Reshaped for Growth and Value Creation Structurally Lower Cost Base 1 High Performance Culture 2 Accelerating Store Rotation 3 Modernised Supply Chain 4 Exceptional Product, Trusted Brand 5 Leading in Omnichannel including Ocado 6 Compelling Customer Ecosystem 7 Expanded Global Reach 8 Disciplin
Slide 11: 1. Structurally Lower Cost Base
1. Structurally Lower Cost Base Energy Usage Retail Operations 80% of energy in store Technology enabled working Cost focus on refrigeration Colleague cost target & lighting 10% sales Store Support Centres Property and Supply Chain Fewer layers and increased More productive accountability omnichanne
Slide 12: 2. High Performance Culture
2. High Performance Culture Closer to Colleagues Closer to Customers New Digital CEO Support centre colleagues suggestion scheme working 7 days in store Teams at 93% Adoption Data driven decision making Raising the Bar on Talent Skills for Tomorrow Structured Talent Digital mindset programme Product
Slide 13: 3. Accelerating Store Rotation
3. Accelerating Store Rotation Now FY28 Net Change Rotating to Higher Quality New Space FULL LINE 247 180 -67 No. of Made some progress to date, but need to Stores go further to improve the quality of the estate SIMPLY FOOD 316 420 +104 Closing some lower productivity full line stores C&H 9.9 8.2 -1
Slide 14: 3. Accelerating Store Rotation
3. Accelerating Store Rotation What Rotation Achieves: Llandudno Example Old Mostyn Street New Parc Llandudno 19/20 22/23 Excl. Covid Actuals to Date 30.8 -5% C&H Space (k sq.ft.) £8.1m +35% C&H Sales 11.7 +29% Food Space (k sq.ft.) £10.8m +75% Food Sales <2yrs Payback 14
Slide 15: 4. Modernised Supply Chains - Food
4. Modernised Supply Chains - Food Unique product mix naturally incurs higher logistics costs However, rate of increase has been too high Taken immediate action to acquire Gist: • Removes management fee • Enables implementation of the network strategy • Enables productivity improvements • Drives syn
Slide 16: 4. Modernised Supply Chains – C&H
4. Modernised Supply Chains – C&H Factory On Water UK DC On Truck Pick-from-Store Return-to-Store Manage flow Consolidate Slim and Modularity Scale micro- Leverage stores in line with at port automate the e.g. hanging fulfilment hubs and improve demand network to boxed speed back to inventory 16
Slide 17: Katie Bickerstaffe
Katie Bickerstaffe Co Chief Executive 17
Slide 18: 5. Exceptional Product, Trusted Brand
5. Exceptional Product, Trusted Brand Famous for quality Innovation in Food and Leading on Great value relevant style in C&H sustainability M&S COLLECTION M&S FOOD 18 Girls' Permanent Pleats School Pinafore (2-12 Yrs), £10.00 - £14.00 Plant Kitchen Vegan Shortbread Rounds, £5.00
Slide 19: 5. Exceptional Product, Trusted Brand
5. Exceptional Product, Trusted Brand Total Market Share 3.6% Small Basket 9.7% Medium Basket 2.8% Large Basket 0.7% Source: Kantar 52we Sept ‘22 19 19
Slide 20: 5. Exceptional Product, Trusted Brand
5. Exceptional Product, Trusted Brand Backing our heartlands Doubling down Going into battle with confidence in Kidswear on Sportswear 630 lines over £1m, up 20% on FY20 £400m Kidswear business Launching early 2023 PER UNA M&S COLLECTION GOODMOVE 20 High Waisted Wide Leg Jeans, £39.50 StormwearTM Co
Slide 21: 6. Leading In Omnichannel Including Ocado
6. Leading In Omnichannel Including Ocado Seamless with App front and centre Every journey personalised Stores leveraged as an asset Market leading convenience Stores touch 65% of online orders Customers who shop across channels spend 4x more than single channel customers 21
Slide 22: 6. Leading In Omnichannel – Third Party Brands
6. Leading In Omnichannel – Third Party Brands Opportunity over £400m AOV £120, with 96% of baskets containing M&S product Expanded choice across Clothing, Home, Sports and Beauty Curation is key Brands centre of excellence Scaling through dropship NOBODY’S CHILD Striped Funnel Neck Relaxed Jumper,
Slide 23: 7. Compelling Customer Ecosystem
7. Compelling Customer Ecosystem Significant reach NPS improving More to do on engagement Sparks members from Sparks NPS from Scan rate of 6m to 16m -23 to +5 44% 23
Slide 24: 7. Compelling Customer Ecosystem
7. Compelling Customer Ecosystem Category Affinity Next Best Offer Largest Digital Relationship Base Purchase Propensity Single digital identity Next Best Category The Best of M&S available through Sparks Interests Bringing Sparks and Bank rewards together Customer Lifetime Accessible through a sing
Slide 25: 8. Expanded Global Reach
8. Expanded Global Reach Over £1.1 bn retail sales from International Franchise and JV partners in FY22 FY28 International operating profit ambition more than double FY22 FY28 India revenue target 20% CAGR Substantial growth ambitions Largest International C&H retailer in India, already at 90 stores
Slide 26: Stuart Machin
Stuart Machin Chief Executive 26
Slide 27: 9. Disciplined Capital Allocation
9. Disciplined Capital Allocation My CEO focus - Strong Balance Sheet & Investing For Growth & Structural Cash Generation Cost Reduction Efficient day to day operations, driving volume Efficient and effective supply chains growth New Food locations and store rotation to omnichannel Laser focus on ex
Slide 28: Our Plan For Delivery
Our Plan For Delivery 3 Beyond M&S Reshaped for Growth and Value Creation 2 Following 24 months Drive Innovation and Momentum with Customers High-performance culture 1 Deliver c.£400m structural cost savings target Next 12 months Modernised supply chains Increase Resilience and Pace Further c.£150m
Slide 29: Key Takeaways
Key Takeaways Structural Cost Reduction Building towards c.£400m underlying cost savings from overheads Investing in Trusted Value £200m investment in value across C&H and Food Profitable Growth in Market Share Moving volume into growth categories and channels – capable of margins over 10% in C&H an
Slide 30: Forward-looking statements
Statements made in this announcement that look forward in time or that express management's beliefs, expectations or estimates regarding future occurrences and prospects are "forward-looking statements" within the meaning of the United States federal securities laws. These forward-looking statements
Marks and Spencer Group — Investor Day (October 2022) on 6ix