Marks And Spencer Group Plc · LSE:MKS
Marks And Spencer — H1 2022/23 Earnings Presentation
38 slides from Marks And Spencer's earnings presentation, Nov 9, 2022
Slide 1: Half Year Results: Strong Trading Performance as M&S Reshapes for Growth
M&S Stevenage HALF YEAR RESULTS STRONG TRADING PERFORMANCE AS M&S RESHAPES FOR GROWTH 9 NOVEMBER 2022 M&S FOOD Eat Well Veggie Cauliflower Panang Curry, £4.00
Slide 2: Stuart Machin, Chief Executive
STUART MACHIN Chief Executive M&S COLLECTION Feather and Down Gilet, £45.00 2 Zip Up Micro Fleece, £25.00
Slide 3: Strong Trading Performance as M&S Reshapes for Growth
STRONG TRADING PERFORMANCE AS M&S RESHAPES FOR GROWTH STRONG TRADING PERFORMANCE Profit before tax and adjusting items £205.5m Food sales up 5.6%; growth in franchise & hospitality; investment in trusted value; costs pressures C&H sales up 14% with store sales up 18.8%, online up 4.9%. Strong full pr
Slide 4: Eoin Tonge, Chief Finance Officer
EOIN TONGE Chief Finance Officer M&S FOOD Luxury gold tea light up lantern, £5.00 Hot chocolate light up lantern, £4.00 4 Shortbread light up lantern, £6.00
Slide 5: Half Year Financials at a Glance
STRONG TRADING PERFORMANCE AS M&S RESHAPES FOR GROWTH HALF YEAR FINANCIALS AT A GLANCE £5.6bn £205.5m £208.5m 8.8% -23.7% 11.3% Profit before tax Group sales & adjusting items Profit before tax £(215.5)m £2.93bn £628.4m n/a increased 8.5% increased 49.6% Net debt Free cashflow Net debt excluding lea
Slide 6: Food Performance
STRONG TRADING PERFORMANCE AS M&S RESHAPES FOR GROWTH FOOD PERFORMANCE REVENUE % Change to 21/22 Q1 Q2 HY Total Food 6.6 4.5 5.6 Food (ex hospitality and franchise) 1.9 1.9 1.9 FOOD METRICS 26 Weeks Ended 1 Oct 22 2 Oct 21 % Change Footfall (m) (average/week) 10.2 9.5 7.4 Transaction (m) (average/we
Slide 7: Food Performance: Operating Profit
STRONG TRADING PERFORMANCE AS M&S RESHAPES FOR GROWTH FOOD PERFORMANCE OPERATING PROFIT Change £m 22/23 21/22 vs. 21/22 Sales 3,317.5 3,143.0 5.6% Operating profit before 71.8 143.7 -50.0% adjusting items Operating margin 2.2% 4.6% -240bps 7 M&S GOOD TO GO FOOD Chicken & Bacon Caesar Wrap, £3.75
Slide 8: Food Operating Profit Bridge
STRONG TRADING PERFORMANCE AS M&S RESHAPES FOR GROWTH FOOD OPERATING PROFIT BRIDGE Operating profit margin before % adjusting items 21/22 4.6 Gross margin (1.1) Store staffing 0.2 Includes 60bps Other store costs rates relief impact (0.7) Distribution and warehousing (0.5) Central Food costs (0.3) 2
Slide 9: Ocado Contribution to M&S
STRONG TRADING PERFORMANCE AS M&S RESHAPES FOR GROWTH OCADO CONTRIBUTION TO M&S Numbers need updating SHARE OF PROFIT 26 w/e 26 w/e £m Change % Picture needs updating – 28 Aug 22 29 Aug 21 Ocado website and Revenue warehouse 1,089.0 1,136.3 -4.2 EBITDA before exceptional items 9.8 80.7 -87.9 Excepti
Slide 10: Clothing & Home Performance
STRONG TRADING PERFORMANCE AS M&S RESHAPES FOR GROWTH CLOTHING & HOME PERFORMANCE ONLINE METRICS SALES 26 Weeks Ended 1 Oct 22 2 Oct 21 % Change Traffic (m) 204.0 182.9 11.5 % Change to 21/22 Q1 Q2 HY Conversion (%) 7.0 7.3 -30 bps Sales 18.2 10.3 14.0 Average order value (£) 59.4 55.6 6.8 Returns r
Slide 11: Clothing & Home Performance: Operating Profit
STRONG TRADING PERFORMANCE AS M&S RESHAPES FOR GROWTH CLOTHING & HOME PERFORMANCE OPERATING PROFIT Change £m 22/23 21/22 vs. 21/22 Sales 1,749.7 1,534.6 14.0% Operating profit before 171.4 156.2 9.7% adjusting items Operating margin 9.8% 10.2% -40bps 11 M&S COLLECTION Faux Fur Leopard Print Hooded C
Slide 12: Clothing & Home Operating Profit Bridge
STRONG TRADING PERFORMANCE AS M&S RESHAPES FOR GROWTH CLOTHING & HOME OPERATING PROFIT BRIDGE Operating profit margin before Total % Online % Stores % adjusting items 21/22 10.2 10.2 10.1 Gross margin (1.5) (2.9) (0.9) Store staffing 0.4 0.4 0.8 Includes 160bps Other store costs rates relief impact
Slide 13: International Performance
STRONG TRADING PERFORMANCE AS M&S RESHAPES FOR GROWTH INTERNATIONAL PERFORMANCE RETAIL SALES % Change to 21/221 Q1 Q2 HY Total 16.9 10.9 13.7 RETAIL SALES BY PRODUCT % Change % Change 26 Weeks Ended 1 Oct 22 2 Oct 21 vs. 2021/22 vs. 2021/221 Clothing & Home 365.7 296.9 23.2 22.3 (£m) Food (£m) 130.7
Slide 14: International Performance: Operating Profit
STRONG TRADING PERFORMANCE AS M&S RESHAPES FOR GROWTH INTERNATIONAL PERFORMANCE OPERATING PROFIT Change £m 22/23 21/22 vs. 21/22 Sales 496.4 435.3 14.0% Operating profit before 39.0 35.9 8.6% adjusting items Operating margin 7.9% 8.2% -30bps 14 Dubai Hills
Slide 15: International Operating Profit Bridge
STRONG TRADING PERFORMANCE AS M&S RESHAPES FOR GROWTH INTERNATIONAL OPERATING PROFIT BRIDGE Operating profit margin before adjusting items % 21/22 8.2 Gross margin 0.9 Store staffing 0.5 Other store costs (1.5) Distribution and warehousing (0.2) Central International costs - 22/23 7.9 15 City Plaza,
Slide 16: Group Profit Bridge
STRONG TRADING PERFORMANCE AS M&S RESHAPES FOR GROWTH GROUP PROFIT BRIDGE £m 269 19 206 3 209 (47) 193 43 3 0 (29) (52) Adjusted UK Ocado Food Clothing International M&S Net Adjusted Adjusting Profit PBT business & Home Bank finance PBT items Before 21/22 rates relief cost 22/23 Tax 22/23 16 ALBARAY
Slide 17: Adjusting Items
STRONG TRADING PERFORMANCE AS M&S RESHAPES FOR GROWTH ADJUSTING ITEMS £m Strategic programmes UK store estate (26.3) Organisation (14.6) Remeasurement of contingent consideration 112.2 M&S Colchester High Street closed Autumn 2022 Store impairments & other property charges (36.3) Acquisition of Gist
Slide 18: Prioritising Investment in the Transformation
STRONG TRADING PERFORMANCE AS M&S RESHAPES FOR GROWTH PRIORITISING INVESTMENT IN THE TRANSFORMATION CAPEX PRE DISPOSALS IN H1 2022/23 UK store remodelling Property asset replacement 26 42 £151m 21 New UK stores 16 40 6 Supply chain IT and M&S.com International 18 M&S Banbridge
Slide 19: Cash Flow and Change in Net Debt Since Start of Year
STRONG TRADING PERFORMANCE AS M&S RESHAPES FOR GROWTH CASH FLOW AND CHANGE IN NET DEBT SINCE START OF YEAR £m 531 WORKING CAPITAL Increase in payables £261m Increase in stock £(374)m Increase in receivables £(36)m (174) LEASE DEBT Decrease in lease obligations £109.9m (149) New lease commitments £(1
Slide 20: Strong Access to Liquidity
STRONG TRADING PERFORMANCE AS M&S RESHAPES FOR GROWTH STRONG ACCESS TO LIQUIDITY £2.2bn >£1.6bn headroom 2025, £850m RCF Undrawn £850m RCF 2023, £199m Cash balances of £773m at half year 2025, £350m £628m 2026, £300m Bonds1 2027, £250m £150m bonds bought back in H1 2037, £194m £116m SLP Net Debt SLP
Slide 21: Stuart Machin, Chief Executive
STUART MACHIN Chief Executive FRAGRANCE SOCIETY 100ml Diffusers, £16.00 21 Boxed Candles, £10.00
Slide 22: Strong Trading Performance as M&S Reshapes for Growth
STRONG TRADING PERFORMANCE AS M&S RESHAPES FOR GROWTH CLOTHING & FOOD sales OCADO RETAIL Driving improved Investing in data, Building an HOME rebuilding outperformance re-energising its productivity digital and OMNI- INCREASINGLY style, value offset by value offer under new through STORE CHANNEL ser
Slide 23: C&H Rebuilding Style, Value and Profitability
STRONG TRADING PERFORMANCE AS M&S RESHAPES FOR GROWTH C&H REBUILDING STYLE, VALUE AND PROFITABILITY DRIVING HIGHER SALES ON FEWER OPTIONS VALUE & STYLE IMPROVING WITH SHAPE OF BUY 15% Improvement in key indicators for style and value 9% Better shape of buy; Womens’ up 15% on 5% fewer options Lines o
Slide 24: Food Growth Offset by Value Investment and Costs
STRONG TRADING PERFORMANCE AS M&S RESHAPES FOR GROWTH FOOD GROWTH OFFSET BY VALUE INVESTMENT AND COSTS VALUE INVESTMENT AND STOCK LOSS IMPACT MARGIN INVESTING IN TRUSTED VALUE Food gross margin drivers year-on-year Remarksable now cheaper than leading supermarkets 30.7% ‘Bigger Packs, Better Value’
Slide 25: Ocado Retail Re-energising Under New Leadership
STRONG TRADING PERFORMANCE AS M&S RESHAPES FOR GROWTH OCADO RETAIL RE-ENERGISING UNDER NEW LEADERSHIP STRONG GROWTH IN ACTIVE CUSTOMERS REIGNITING THE OFFER UNDER NEW LEADERSHIP Active customers (‘000) Pandemic period created unprecedented conditions 1000 Focused on restoring core offer under new le
Slide 26: Driving Improved Productivity Through Store Rotation
STRONG TRADING PERFORMANCE AS M&S RESHAPES FOR GROWTH DRIVING IMPROVED PRODUCTIVITY THROUGH STORE ROTATION HIGHER ONLINE CONTRIBUTION SUPPORTS PROFITABLE ROTATION ROTATION IMPROVES THE QUALITY OF EARNINGS Operating profit contribution* of stores vs online Tail of low productivity Full Line stores ge
Slide 27: Katie Bickerstaffe, Co-Chief Executive
KATIE BICKERSTAFFE Co-Chief Executive M&S COLLECTION Sequin Collared Long Sleeve Shirt, £49.50 27 Sequin Round Neck Regular Fit Top, £29.50
Slide 28: Investing in Digital and Omnichannel Service
STRONG TRADING PERFORMANCE AS M&S RESHAPES FOR GROWTH INVESTING IN DIGITAL AND OMNICHANNEL SERVICE INCREASING INVESTMENT IN DATA AND DIGITAL CAPABILITIES OVER £200M OF DATA AND DIGITAL INVESTMENT Created a comprehensive customer data engine £m 20/21 to 22/23 Total Substantial growth in App use and S
Slide 29: Investing in Digital and Omnichannel Service
STRONG TRADING PERFORMANCE AS M&S RESHAPES FOR GROWTH INVESTING IN DIGITAL AND OMNICHANNEL SERVICE DRIVING GROWTH THROUGH 4M APP USERS Monthly active app users (m) CREATING AN OMNICHANNEL SHOPPING EXPERIENCE Higher spend by connecting the online to offline journey 4.0 Objective to create personalise
Slide 30: Building Global M&S Through Strong Partnerships
STRONG TRADING PERFORMANCE AS M&S RESHAPES FOR GROWTH BUILDING GLOBAL M&S THROUGH STRONG PARTNERSHIPS STRONG SALES GROWTH IN ASIA AND MIDDLE EAST STRONG REBOUND IN CLOTHING & HOME Reported sales vs H1 21/22 C&H growth in key markets; India doubles on last year 61% Exit from chilled Food in Czech and
Slide 31: Stuart Machin, Chief Executive
STUART MACHIN Chief Executive M&S DISTILLED SPIRITS RANGE 31 Finest quality spirits sourced by the world’s best producers, £18.00
Slide 32: Guidance for 2022/23
STRONG TRADING PERFORMANCE AS M&S RESHAPES FOR GROWTH GUIDANCE FOR 2022/23 THE BUSINESS CONTINUES TO TRADE WELL Overall trading in first 4 weeks in line with forecast C&H sales up 4.2%, Food sales up 3.0%, International up 4.1% WELL SET UP FOR PEAK TRADING Improved ranges and strong value positionin
Slide 33: Increasing Resilience to Outperform in the Downturn
STRONG TRADING PERFORMANCE AS M&S RESHAPES FOR GROWTH INCREASING RESILIENCE TO OUTPERFORM IN THE DOWNTURN ENTRY PRICE POINTS COMPETITIVE WITH SUPERMARKETS MUCH-IMPROVED CUSTOMER PROPOSITION Price index M&S vs peers (0) 15 Resilient customer base with higher savings cushion 10 Market shares in less f
Slide 34: Appendices
M&S Colchester APPENDICES M&S Colchester
Slide 35: Quarterly Sales Performance vs. 21/22
STRONG TRADING PERFORMANCE AS M&S RESHAPES FOR GROWTH QUARTERLY SALES PERFORMANCE VS. 21/22 % Change to 21/22 Q1 Q2 HY Food 6.6 4.5 5.6 Clothing & Home 18.2 10.3 14.0 Total UK Sales 10.3 6.5 8.3 International 16.9 10.9 13.7 Group Adjusted Revenue* 10.8 6.8 8.8 Memo M&S.com 5.2 1.1 3.1 Clothing & Hom
Slide 36: Depreciation and Amortisation
STRONG TRADING PERFORMANCE AS M&S RESHAPES FOR GROWTH DEPRECIATION AND AMORTISATION FY 21/22 £m Food C&H Intl Other Group Group Adjusted operating profit 71.8 171.4 39.0 -1.5 280.7 Depreciation Tangible asset 42.7 74.5 6.4 - 120.9 Right of use asset 43.7 27.1 12.3 - 83.0 Amortisation 17.5 22.7 2.8 -
Slide 37: Finance Lease Breakdown
STRONG TRADING PERFORMANCE AS M&S RESHAPES FOR GROWTH FINANCE LEASE BREAKDOWN International 214 Office, warehouse and other 485 902 £2,300m Full line H1 22/23 700 Simply Food 37 M&S COLLECTION Percy Pig Family Christmas Pyjamas, £12.00 - £28.00
Slide 38: Stores and Selling Space
STRONG TRADING PERFORMANCE AS M&S RESHAPES FOR GROWTH STORES AND SELLING SPACE NUMBER OF STORES UK Selling space (m sq ft) Sep 22 Mar 22 Openings Closures Reclassified Change Shopping Centre 1.5 16 16 0 0 0 0 Retail Park 4.5 79 75 2 0 2 4 High Street – large 4.8 72 76 0 (2) (2) (4) High Street 2.3 8
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