Marks And Spencer Group Plc · LSE:MKS
Marks And Spencer — FY2021/22 Earnings Presentation
34 slides from Marks And Spencer's earnings presentation, May 25, 2022
Slide 1: Strong Performance Delivered by a More Resilient M&S
STRONG PERFORMANCE DELIVERED BY A MORE RESILIENT M&S FULL YEAR RESULTS 25 MAY 2022 1
Slide 2: Steve Rowe, Chief Executive
EST. 1984 STEVE ROWE CHIEF EXECUTIVE ~ a>
Slide 3: Well Positioned for Next Phase of Transformation
STRONG PERFORMANCE DELIVERED BY A MORE RESILIENT M&S WELL POSITIONED FOR NEXT PHASE OF TRANSFORMATION M&S FOOD: high OCADO transitioning CLOTHING & HOME Building STORE INTERNATIONAL performing business to strong capacity on track for a more ROTATION pipeline, absorbing Brexit and market growth, post
Slide 4: Food: High Performing and Market Share Growth
STRONG PERFORMANCE DELIVERED BY A MORE RESILIENT M&S FOOD: HIGH PERFORMING AND MARKET SHARE GROWTH BASKET SIZE HIGHER THAN PRE-COVID LEVELS Core basket size vs. 2019/20 MARKET SHARE GROWTH DESPITE HEADWINDS 50% Best performing UK grocery chain 40% Absence of online sales in M&S performance 30% Gradu
Slide 5: Ocado Transitioning to Strong Capacity Growth
STRONG PERFORMANCE DELIVERED BY A MORE RESILIENT M&S OCADO TRANSITIONING TO STRONG CAPACITY GROWTH ACTIVE CUSTOMER GROWTH AS NEW CFCS OPEN Active customers (‘000) 832 835 GROWTH IN CUSTOMERS AS TRENDS NORMALISE 778 777 773 769 Growth in customers driven by new CFC capacity Basket size and trade refl
Slide 6: Clothing & Home on Track for More Profitable Model
STRONG PERFORMANCE DELIVERED BY A MORE RESILIENT M&S CLOTHING & HOME ON TRACK FOR MORE PROFITABLE MODEL CONSISTENTLY #1 FOR VALUE PERCEPTION RESHAPING THE ‘PRODUCT ENGINE’ 40 Focus on contemporary style and streamlined range Sale stock down 34% enabling simpler operation 35 Improved style perception
Slide 7: Clothing & Home on Track for More Profitable Model
STRONG PERFORMANCE DELIVERED BY A MORE RESILIENT M&S CLOTHING & HOME ON TRACK FOR MORE PROFITABLE MODEL ACTIVE APP USERS GROWN TO OVER 4M Monthly app users (m) MS2 DRIVING OMNI-CHANNEL GROWTH 4.3 Strong year: C&H online up 55% and margin of c.9% 3.1 Mobile & app growth; over 10% in-store fulfilment
Slide 8: Store Rotation Driving Exit from Legacy Stores
STRONG PERFORMANCE DELIVERED BY A MORE RESILIENT M&S STORE ROTATION DRIVING EXIT FROM LEGACY STORES RENEWAL FORMAT IN 40 STORES ACROSS THE UK GOOD PROGRESS ON STORE ROTATION Overall target of less than 180 full line stores 68 full line and 19 small food stores closed to date 40 Food renewal stores i
Slide 9: International Partners Strong, Online Growing
STRONG PERFORMANCE DELIVERED BY A MORE RESILIENT M&S INTERNATIONAL PARTNERS STRONG, ONLINE GROWING STRONG BOUNCE-BACK IN INDIA Retail sales vs. 2019/20 SOLID GROWTH IN MIDDLE EAST, INDIA & ONLINE 90% Strong domestic demand in Middle East 60% 30% Substantial bounce-back in India following lockdowns 0
Slide 10: Extending and Expressing Our Sustainability Lead
STRONG PERFORMANCE DELIVERED BY A MORE RESILIENT M&S EXTENDING AND EXPRESSING OUR SUSTAINABILITY LEAD PIONEERING ‘PLAN A’ ESG PROGRAMME RESET A net zero business across scopes 1, 2 & 3 Target reduction: 1/3 by 2025, net zero by 2040 M&S brand heritage of working closely with suppliers SOLID PROGRESS
Slide 11: Eoin Tonge, Chief Finance Officer
EOIN TONGE CHIEF FINANCE OFFICER
Slide 12: Full Year Financials at a Glance
STRONG PERFORMANCE DELIVERED BY A MORE RESILIENT M&S FULL YEAR FINANCIALS AT A GLANCE £10.9bn £522.9m £391.7m 6.9% 29.7% 482.9% Profit before tax Group revenue & adjusting items Profit before tax £699.2m £2.70bn £420.1m 240% reduced 31.7% reduced 70% Net debt Free cashflow Net debt excluding leases
Slide 13: Food Performance
STRONG PERFORMANCE DELIVERED BY A MORE RESILIENT M&S FOOD PERFORMANCE SHAPE OF CHAIN % change to 19/20 % change to 19/20 REVENUE Simply Food +23 High Street -8 % change Retail parks +22 City centre -14 Q1 Q2 Q3 Q4 FY to 19/20 Franchise fuel +11 Franchise travel (rail/air/roadside) -39 Total Food 9.4
Slide 14: Food Performance: Operating Profit
STRONG PERFORMANCE DELIVERED BY A MORE RESILIENT M&S FOOD PERFORMANCE OPERATING PROFIT £m 21/22 20/21 19/20 Change vs. 19/20 Sales 6,639.6 5,994.8 6,028.2 10.1% Operating profit before 277.8 213.6 236.7 17.4% adjusting items Operating margin 4.2% 3.6% 3.9% +30bps 14 M&S New Milton
Slide 15: Food Operating Profit Bridge
STRONG PERFORMANCE DELIVERED BY A MORE RESILIENT M&S FOOD OPERATING PROFIT BRIDGE Operating profit margin before % adjusting items 19/20 3.9 Gross margin 0.2 Store staffing 1.4 Other store costs 0.4 Distribution and warehousing (1.1) Central costs (0.6) 21/22 4.2 15
Slide 16: Ocado Contribution to M&S
STRONG PERFORMANCE DELIVERED BY A MORE RESILIENT M&S OCADO CONTRIBUTION TO M&S (VS. 2020/21) Numbers need updating SHARE OF PROFIT 52 w/e 28 52 w/e 28 £m Change % Picture needs updating – Feb 22 Feb 21 Ocado website and Revenue warehouse 2,248.8 2,353.2 -4.4 EBITDA before exceptional items 104.8 189
Slide 17: Clothing & Home Performance
STRONG PERFORMANCE DELIVERED BY A MORE RESILIENT M&S CLOTHING & HOME PERFORMANCE ONLINE METRICS % Change 52 Weeks Ended 2 Apr 22 28 Mar 20 SALES vs. 2019/20 Traffic (m) 405.7 308.8 31.4 % change to 19/20 Q1 Q2 Q3 Q4 FY Active customers (m) 9.0 5.9 52.5 Conversion (%) 7.0 6.3 +70 bps Sales -4.2 2.0 3
Slide 18: Clothing & Home Performance: Operating Profit
STRONG PERFORMANCE DELIVERED BY A MORE RESILIENT M&S CLOTHING & HOME PERFORMANCE OPERATING PROFIT Change £m 21/22 20/21 19/20 vs. 19/20 Sales 3,332.2 2,198.6 3,209.1 3.8% Operating profit/(loss) 330.7 (129.4) 223.9 47.7% before adjusting items Operating margin 9.9% -5.9% 7.0% +290bps 18 GOODMOVE Wat
Slide 19: Clothing & Home Operating Profit Bridge
STRONG PERFORMANCE DELIVERED BY A MORE RESILIENT M&S CLOTHING & HOME OPERATING PROFIT BRIDGE Operating profit margin before adjusting items % 19/20 7.0 Gross margin 1.5 Store staffing 2.6 Other store costs 1.5 Distribution and warehousing (1.7) Central costs (1.0) 21/22 9.9 19
Slide 20: International Performance
STRONG PERFORMANCE DELIVERED BY A MORE RESILIENT M&S INTERNATIONAL PERFORMANCE ONLINE SALES BY REGION 200% RETAIL SALES 160% 120% % change to 19/201 Q1 Q2 Q3 Q4 FY 80% 40% Total -8.7 3.8 8.9 14.4 4.3 Asia Middle East Europe H1 H2 Online 191 141 128 158 152 STORE SALES BY REGION Stores -20.3 -5.1 0.6
Slide 21: International Operating Profit Bridge
STRONG PERFORMANCE DELIVERED BY A MORE RESILIENT M&S INTERNATIONAL OPERATING PROFIT BRIDGE Operating profit margin before adjusting items % 19/20 11.7 Gross margin (0.1) Store staffing 1.0 Other store costs 1.0 Distribution and warehousing (3.0) Central costs (2.7) 21/22 7.9 21 City Plaza, Hong Kong
Slide 22: Group Profit Bridge
STRONG PERFORMANCE DELIVERED BY A MORE RESILIENT M&S GROUP PROFIT BRIDGE £m 2 523 11 (37) (4) 403 392 (131) Adjusted Food Ocado Clothing International M&S Net Adjusted Adjusting Profit PBT & Home Bank finance PBT items Before Tax 19/20 cost 21/22 21/22 OPERATING PROFIT 22 NOBODY'S CHILD M&S DitsySou
Slide 23: Adjusting Items
STRONG PERFORMANCE DELIVERED BY A MORE RESILIENT M&S ADJUSTING ITEMS £m Strategic programmes UK store estate (161.4) UK logistics 21.9 Organisation 14.3 Other 0.4 Store impairments & other property charges 60.0 M&S Leamington Royal Priors closed October 2021 Franchise restructure (41.3) Ocado Retail
Slide 24: Cash Flow and Change in Net Debt Since Start of Year
STRONG PERFORMANCE DELIVERED BY A MORE RESILIENT M&S CASH FLOW AND CHANGE IN NET DEBT SINCE START OF YEAR £m 1220 LEASE DEBT Decrease in lease obligations £216m 240 New lease commitments £(100)m Other £2m (37) (344) 118 817 (214) (88) 25 699 WORKING CAPITAL (62) (41) Increase in payables £290m Incre
Slide 25: Outlook for 2022/23
STRONG PERFORMANCE DELIVERED BY A MORE RESILIENT M&S OUTLOOK FOR 2022/23 MARKET OUTLOOK GUIDANCE Overall trading in the first six This coming year, the business will weeks ahead of comparable period not receive business rates relief, in 2021/22 which was £60m in 21/22 In our International business,
Slide 26: Prioritising Investment in the Transformation
STRONG PERFORMANCE DELIVERED BY A MORE RESILIENT M&S PRIORITISING INVESTMENT IN THE TRANSFORMATION CAPEX PRE DISPOSALS IN 2021/22 CAPEX AMBITION FOR 2022/23 UK store remodelling UK store Property asset remodelling replacement Property asset replacement 50 85 New UK New UK stores £300m 50 stores c.£4
Slide 27: Capital Allocation Priorities Unchanged
STRONG PERFORMANCE DELIVERED BY A MORE RESILIENT M&S CAPITAL ALLOCATION PRIORITIES UNCHANGED Prioritising investment in the transformation Ambition to sustain balance sheet metrics consistent with investment grade The Board will consider the scale and timing of a resumption of dividend payments at t
Slide 28: Appendices
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Slide 29: Additional Costs Associated with Brexit
STRONG PERFORMANCE DELIVERED BY A MORE RESILIENT M&S ADDITIONAL COSTS ASSOCIATED WITH BREXIT GROUP BREXIT IMPACTS £m 21/22 Admin costs (29) Tariffs (13) Estimated trade impact (18) Total (60) PRODUCT JOURNEY Farm or Factory Labelling Delivery Product Vet Pick Vet Export Paperwork Vehicle Sailing / M
Slide 30: Quarterly Sales Performance vs. 20/21
STRONG PERFORMANCE DELIVERED BY A MORE RESILIENT M&S QUARTERLY SALES PERFORMANCE VS. 20/21 % change to 20/21 Q1 Q2 Q3 Q4 FY Food 11.8 9.7 10.0 11.8 10.8 Food LFL 8.9 7.9 8.8 9.3 8.7 Clothing & Home 148.8 29.6 37.7 44.3 51.6 Clothing & Home LFL 138.5 29.6 36.2 38.4 48.4 Total UK Sales 35.3 15.7 18.6
Slide 31: Quarterly Sales Performance vs. 19/20
STRONG PERFORMANCE DELIVERED BY A MORE RESILIENT M&S QUARTERLY SALES PERFORMANCE VS. 19/20 % change to 19/20 Q1 Q2 Q3 Q4 FY Food 9.4 11.5 12.4 7.0 10.1 Clothing & Home -4.2 2.0 3.2 17.3 3.8 Total UK Sales 4.7 8.0 8.9 10.0 8.0 International -6.1 -0.3 5.1 7.9 1.7 Group Adjusted Revenue* 3.7 7.3 8.6 9.
Slide 32: Depreciation and Amortisation
STRONG PERFORMANCE DELIVERED BY A MORE RESILIENT M&S DEPRECIATION AND AMORTISATION FY 21/22 £m Food C&H Intl Other Group Group Adjusted operating profit 278 331 74 27 709 Depreciation Tangible asset 106 130 12 - 249 Right of use asset 85 58 23 - 166 Amortisation 38 49 7 - 95 Write off & disposal cos
Slide 33: Finance Lease Breakdown
STRONG PERFORMANCE DELIVERED BY A MORE RESILIENT M&S FINANCE LEASE BREAKDOWN International 197 Office, Warehouse & Other 450 449 920 Full Line £2,279m FY 21/22 713 Simply Food 33 M&S Stevenage
Slide 34: Stores and Selling Space
STRONG PERFORMANCE DELIVERED BY A MORE RESILIENT M&S STORES AND SELLING SPACE NUMBER OF STORES UK Selling space (m sq ft) Mar 22 Mar 21 Openings Closures Reclassified Change Shopping Centre 1.5 16 16 0 0 0 0 Retail Park 4.3 75 73 2 (1) 1 2 High Street – large 5.1 76 81 0 (5) 0 (5) High Street 2.3 80
Marks and Spencer Group — FY2021/22 Earnings Presentation on 6ix