Marks And Spencer Group Plc · LSE:MKS
Marks And Spencer — Q2 2021 Earnings Presentation
31 slides from Marks And Spencer's earnings presentation, Nov 4, 2020
Slide 1: Robust Performance in Unprecedented Times: Half Year Results
Never the Same SHOP HARRY POTTER SHOP KNITWEAR Again ROBUST PERFORMANCE IN UNPRECEDENTED TIMES HALF YEAR RESULTS 4 November 2020 1
Slide 2: Agenda
NEVER THE SAME AGAIN AGENDA ROBUST PERFORMANCE IN UNPRECEDENTED TIMES NEVER THE SAME AGAIN ACCELERATING TRANSFORMATION STEVE ROWE CHIEF EXECUTIVE M&S Foodhall Notting Hill
Slide 3: Decisively Shifting Towards Online
NEVER THE SAME AGAIN DECISIVELY SHIFTING TOWARDS ONLINE Robust performance in unprecedented times − Remarkable efforts of colleagues in the face of extraordinary challenges − Strong Food performance mitigating hospitality and franchise closures − Exceptional growth and profitability of Ocado Retail
Slide 4: Eoin Tonge, Chief Finance Officer
EOIN TONGE CHIEF FINANCE OFFICER M&S Eclipse Maidstone
Slide 5: Half Year Financials at a Glance
NEVER THE SAME AGAIN HALF YEAR FINANCIALS AT A GLANCE £4.1bn £(17.4)m £(87.6)m -15.8% - - Loss before tax Group revenue & adjusting items Loss before tax £77.6m £3.91bn £1.40bn 233% reduced 2.9% reduced 4.4% Free cashflow Net debt Net financial debt 5 GOODMOVE Go Train Colour Block Gym Leggings, £29
Slide 6: Food Performance
NEVER THE SAME AGAIN FOOD PERFORMANCE REVENUE OPERATING PROFIT MARGIN % Q1 Q2 H1 19/20 £M 92.2 3.2% Total -2.1 1.6 -0.3 Gross profit (25.5) LFL 2.0 3.4 2.7 Store staffing 8.8 LFL (ex. hospitality) 6.7 6.5 6.6 Other store costs 32.7 Distribution and (16.9) warehousing Central costs 18.4 MARGIN 20/21
Slide 7: Ocado Contribution to M&S
NEVER THE SAME AGAIN OCADO CONTRIBUTION TO M&S SHARE OF PROFIT £M Revenue 1,167.7 EBITDA before exceptional items 89.1 Exceptional items 28.5 Operating profit 100.5 Profit after tax 77.6 M&S 50% share of profit after tax 38.8 7
Slide 8: Clothing & Home Performance
NEVER THE SAME AGAIN CLOTHING & HOME PERFORMANCE REVENUE OPERATING LOSS MARGIN % Q1 Q2 H1 19/20 £M 109.6 7.1% Total -61.5 -21.3 -40.8 Gross profit (389.1) Stores -83.8 -39.5 -61.1 Store staffing 80.0 Online 21.5 46.4 34.3 Other store costs 54.7 LFL Distribution and (5.7) -59.3 -21.2 -39.3 warehousin
Slide 9: Profit Bridge
NEVER THE SAME AGAIN PROFIT BRIDGE £M 39 176 Adjusting items Includes: Restructuring costs £(92.1)m Attributable to Covid-19 £49.4m (217) 14 (36) (11) (17) (70) (88) Adjusted Food Ocado Clothing International M&S Net Adjusted Adjusting Loss PBT & Home Bank finance Loss Before items Before Tax 19/20
Slide 10: Capital Expenditure Before Disposals
NEVER THE SAME AGAIN CAPITAL EXPENDITURE BEFORE DISPOSALS £M 122 International 4 Supply chain 19 International 2 Property maintenance 28 Clothing & Home 16 £54m UK store remodelling 23 54 H1 20/21 2 36 10 Food New UK stores 16 5 4 9 IT & M&S.com 32 24 19/20 20/21 10
Slide 11: Cash Flow and Reduction in Net Debt
NEVER THE SAME AGAIN CASH FLOW AND REDUCTION IN NET DEBT £M 368 75 (36) LEASE DEBT Decrease in lease obligations £78m (129) New lease commitments £(12)m Other £(12)m WORKING CAPITAL Decrease in stock £8m Decrease in receivables £28m (133) 54 119 Increase in payables £39m (38) 65 (23) (19) Adjusted C
Slide 12: Substantial Cash and Undrawn Facilities
NEVER THE SAME AGAIN SUBSTANTIAL CASH AND UNDRAWN FACILITIES Undrawn £1.1bn RCF with significant relaxation/waiver of covenants £1.39bn £1.43bn Cash 2021 £286m Additional £300m CCFF facility available 2023 2025 Undrawn RCF Cash balances of £286m at the half £1.1bn year end 2027 2037 Cash & Available
Slide 13: Looking Forward
NEVER THE SAME AGAIN LOOKING FORWARD First half results demonstrate resilience of business, positioned for recovery through Never the Same Again Recent trading similar to end of Q2. Well set up through second lockdown, with C&H store sales decline likely mitigated by online growth and reduced costs
Slide 14: Steve Rowe, Chief Executive Officer
STEVE ROWE CHIEF EXECUTIVE OFFICER M&S Eclipse Maidstone
Slide 15: Our Priorities
NEVER THE SAME AGAIN OUR PRIORITIES Faster Food Capture Simplify Turbocharge Store estate growth with value in Food range and growth at for the new Ocado Retail supply chain value in C&H M&S.com world 15
Slide 16: Faster Food Growth – M&S Food
NEVER THE SAME AGAIN FASTER FOOD GROWTH – M&S FOOD IMPROVING VALUE PERCEPTION Strong underlying performance – H1 LFL +6.6% ex-hospitality Net Promoter Score 70% 65% Value perception continues to improve driven 60% by further expansion of Remarksable lines 55% 50% Oct ‘18 Mar ‘19 Sep ‘19 Mar ‘20 Sep
Slide 17: Faster Food Growth – Successful Ocado Launch
NEVER THE SAME AGAIN FASTER FOOD GROWTH – SUCCESSFUL OCADO LAUNCH FOOD NPD LINES INCLUDE Successful launch of M&S products on Ocado.com GROCERY ORGANIC REMARKSABLE HOMECARE Full M&S Food range and selected Clothing & Home lines available offering Ocado customers more choice and better value 132 90 7
Slide 18: Faster Food Growth – Next Wave of Ocado Growth
NEVER THE SAME AGAIN FASTER FOOD GROWTH – NEXT WAVE OF OCADO GROWTH STEP CHANGE IN ONLINE MARKET Exceptional period of growth for Ocado Retail in H1with sales up 47.9% % of Food market online 12.5% 7.6% Step change in online penetration and market growth rate since M&S’s original investment Substant
Slide 19: Capture Value and Lower Cost in Food Supply Chain
NEVER THE SAME AGAIN CAPTURE VALUE AND LOWER COST IN FOOD SUPPLY CHAIN LOWERING COST PROGRAMME – H1 20/21 Substantial opportunity to capture value and lower cost in end to end supply chain Benefit Share by Project Type (£M) Product Specification 4 3 Procurement Efficiency Lowering cost by working wi
Slide 20: Simplify Range and Move to Trusted Value in C&H
NEVER THE SAME AGAIN SIMPLIFY RANGE AND MOVE TO TRUSTED VALUE IN C&H M&S.COM SHIFTED TO CASUAL AND HOME C&H ahead of plan in sales and stock % change Online Stores % change Online Stores Casual +40 -37 Formal -16 -54 Kids +83 -31 Holiday -34 -50 Lingerie & essentials +87 -37 Shoes & accessories -20
Slide 21: Turbocharge Growth at M&S.com – H1 Performance
NEVER THE SAME AGAIN TURBOCHARGE GROWTH AT M&S.COM – H1 PERFORMANCE STRONG TRAFFIC GROWTH Extraordinary period for M&S.com with growth online across all businesses YoY % contribution to sales growth 35 33 27 (5) Strong growth in traffic and lower returns (12) more than offset lower in-store furnitur
Slide 22: Turbocharge Growth at M&S.com – Launching MS2
NEVER THE SAME AGAIN TURBOCHARGE GROWTH AT M&S.COM – LAUNCHING MS2 AMBITION TO CREATE A TRULY DIGITAL OPERATION The crisis has highlighted the opportunity for M&S to accelerate change to win online ONLINE ONLY Investments in platform, data, loyalty and proposition over the last three years enabled s
Slide 23: Store Estate Reinvented for the New World
NEVER THE SAME AGAIN STORE ESTATE REINVENTED FOR THE NEW WORLD SHAPE OF CHAIN PERFORMANCE Covid has re-confirmed our strategy to rotate and modernise the estate FOOD CLOTHING & HOME % change % change % change % change Benefits of new stores with good access and Simply Food +19 High Street -14 Retail
Slide 24: Well Set Up for a Unique Peak
NEVER THE SAME AGAIN WELL SET UP FOR A UNIQUE PEAK Prioritising colleague health and wellbeing Giving customers the confidence to shop Offering new digital tools to make shopping easier Increasing online distribution capacity to ensure delivery Product with magic & sparkle to keep Christmas special
Slide 25: Recap – Accelerated Transformation Across M&S
NEVER THE SAME AGAIN RECAP – ACCELERATED TRANSFORMATION ACROSS M&S Robust performance in a period like no other: Strong Food growth and Ocado contribution, C&H recovering with stock well managed Decisive steps forward in the Never the Same Again programme to accelerate transformation Successfully de
Slide 26: Appendix
Appendix 26
Slide 27: Quarterly Sales Performance
NEVER THE SAME AGAIN QUARTERLY SALES PERFORMANCE % change to LY H1 Q1 Q2 Food -0.3 -2.1 1.6 Food LFL 2.7 2.0 3.4 Clothing & Home -40.8 -61.5 -21.3 Clothing & Home LFL -39.3 -59.3 -21.2 Total UK Sales -14.6 -22.6 -6.6 Total UK LFL -12.3 -19.2 -5.6 International -24.7 -40.7 -9.2 Group Adjusted Revenue
Slide 28: Depreciation and Amortisation
NEVER THE SAME AGAIN DEPRECIATION AND AMORTISATION H1 20/21 £M Food C&H Intl Other Group Group Adjusted operating profit 110 (108) 20 40 62 Depreciation Tangible asset 58 86 7 - 151 Right of use asset 41 32 12 - 85 Amortisation 29 38 3 - 70 Write off & disposal costs 1 3 (5) - - Depreciation & Amort
Slide 29: Adjusting Items
NEVER THE SAME AGAIN ADJUSTING ITEMS £m Strategic programmes – Organisation (92.1) Directly attributable to Covid-19 49.4 Sparks loyalty programme transition (15.3) Strategic programme – UK store estate (2.9) M&S Bank charges (1.4) Other (7.9) Total adjusting items (70.2) 29 M&S COLLECTION Herringbo
Slide 30: Lease Liabilities Breakdown
NEVER THE SAME AGAIN LEASE LIABILITIES BREAKDOWN International Non Property 222 36 Office, Warehouse 467 1027 Full Line & Other £2,508m HY 20/21 756 Simply Food 30
Slide 31: Stores and Selling Space
NEVER THE SAME AGAIN STORES AND SELLING SPACE UK Selling space (m sq ft) Sept 20 Mar 20 Openings Closures Change Shopping Centre 1.5 16 16 0 0 0 Retail Park 4.2 73 70 3 0 3 High Street – large 5.4 81 81 0 0 0 High Street 2.4 86 89 0 (3) (3) Full line total 13.5 256 256 3 (3) 0 Outlets 0.4 32 32 0 0
Marks and Spencer Group — Q2 2021 Earnings Presentation on 6ix