Marks And Spencer Group Plc · LSE:MKS

Marks And Spencer — H1 2023/24 Earnings Presentation

32 slides from Marks And Spencer's earnings presentation, Nov 8, 2023

  1. Slide 1: Half Year Results: Reshaping M&S, Strategy Delivers Strong Results

    HALF YEAR RESULTS RESHAPING M&S STRATEGY DELIVERS STRONG RESULTS 8 NOVEMBER 2023 M&S FOOD Collection Columbian Ground Coffee, £4.00 Luxury Gold Teabags, £6.75 Collection Italian Hazelnut Crème, £4.50 M&S COLLECTION Collection Granola Grain Free Fruit & Nut, £5.00 Faux Shearling Borg Lined Aviator Ja

  2. Slide 2: Stuart Machin, Chief Executive

    STUART MACHIN CHIEF EXECUTIVE M&S COLECTION Slim Fit Velvet Jacket, £99.00 M&S FOOD Merino Roll Neck Jumper, £45.00 Butter Chicken Takeaway for One, £6.50 Silk Geometric Print Scarf, £50.00 2 Chicken Jalfrezi Takeaway for One, £6.50 Sparkly Round Neck Midi Column Dress, £39.50

  3. Slide 3: Strong H1 Results and Restoration of Dividend

    RESHAPING M&S STRATEGY DELIVERS STRONG RESULTS STRONG H1 RESULTS AND RESTORATION OF DIVIDEND Profit before tax and adjusting items £360.2m, up 75% Food sales up 14.7% and outperforming the market on volume and value Clothing & Home sales up 5.7%, with store sales up 6.2% and online up 4.6% from more

  4. Slide 4: Reshaping M&S to Deliver Long-Term Growth

    RESHAPING M&S STRATEGY DELIVERS STRONG RESULTS RESHAPING M&S TO DELIVER LONG-TERM GROWTH Food performance driving volume and market share increases, reflecting value investment, product innovation and quality upgrades Clothing & Home building improved style and value perceptions and increasing in fu

  5. Slide 5: Food Volumes Outperform All Grocery Peers

    RESHAPING M&S STRATEGY DELIVERS STRONG RESULTS FOOD VOLUMES OUTPERFORM ALL GROCERY PEERS M&S VOLUMES CONSISTENTLY AHEAD OF THE MARKET 8% 8% 7% 6% FOOD CONTINUES TO OUTPERFORM 3% 3% Strong volume growth; outperforming all mainline grocers Increase in customer numbers across all six months Category re

  6. Slide 6: Clothing & Home Momentum Continues

    RESHAPING M&S STRATEGY DELIVERS STRONG RESULTS CLOTHING & HOME MOMENTUM CONTINUES FULL PRICE SALES MIX OVER 80% FOR THREE YEARS 83% 81% 82% MOMENTUM IN WOMENSWEAR AND MENSWEAR 68% 66% Womenswear #1 share in summer – first time since 2019 Menswear sales up 33% over the past two years More confident b

  7. Slide 7: M&S App Sales Participation Increasing

    RESHAPING M&S STRATEGY DELIVERS STRONG RESULTS M&S APP SALES PARTICIPATION INCREASING SALES THROUGH THE M&S APP INCREASING 43% 39% DRIVING GROWTH THROUGH THE M&S APP 34% Sales participation through the app grew to over 40% M&S active App users increase by c.7% to 4.9m Early upgrades to app to enhanc

  8. Slide 8: Ocado Retail - Early Stages of Restoring Profitability

    RESHAPING M&S STRATEGY DELIVERS STRONG RESULTS OCADO RETAIL - EARLY STAGES OF RESTORING PROFITABILITY INCREASING NUMBER OF M&S SKU’S ON OCADO.COM 80% OCADO RETAIL COLLABORATION INCREASES 77% 76% M&S range increased to over 4,000 core lines, 80% of range 73% First joint sourcing tender completed in Q

  9. Slide 9: Expanding Global Reach Through Strong Partnerships

    RESHAPING M&S STRATEGY DELIVERS STRONG RESULTS EXPANDING GLOBAL REACH THROUGH STRONG PARTNERSHIPS RETAIL SALES GROWTH ACROSS ALL REGIONS £m 415 392 UNDERLYING GROWTH ACROSS PARTNER MARKETS Retail sales growth across all three major regions 264 Strong Food trading performance 246 Partner orders more

  10. Slide 10: Strategy to Reshape M&S for Growth Delivering

    RESHAPING M&S STRATEGY DELIVERS STRONG RESULTS STRATEGY TO RESHAPE M&S FOR GROWTH DELIVERING EXCEPTIONAL PRODUCT, TRUSTED STRUCTURALLY LOWER COSTS RETAILER +£100m savings: stores, supply chain & support centre Food improvements in quality, value and volume On track to deliver £150m by the end of the

  11. Slide 11: Jeremy Townsend, Chief Financial Officer

    JEREMY TOWNSEND CHIEF FINANCIAL OFFICER M&S Collection Slim Fit Velvet Tuxedo Jacket, £99.00 Merino Roll Neck Jumper, £45.00 Originials Pleat Denim Trousers, £45.00 Foil Polka Dot V-Neck Midi Tiered Dress, £49.50 11 Plisse Jumpsuit (6-16 Yrs), £30.00

  12. Slide 12: Half Year Financials at a Glance

    RESHAPING M&S STRATEGY DELIVERS STRONG RESULTS HALF YEAR FINANCIALS AT A GLANCE £6.2bn £325.6m £360.2m +10.8% +56.2% +75.3% Profit before tax Profit before tax Group sales and adjusting items £27.7m £319.9m £2.56bn +£144.5m -£308.5m -£0.37bn Free cash flow Net debt Net debt from operations excluding

  13. Slide 13: Group Profit Bridge

    RESHAPING M&S STRATEGY DELIVERS STRONG RESULTS GROUP PROFIT BRIDGE £m ADJUSTING ITEMS INCLUDE: UK store estate £(67.1)m Ocado Retail - UK network capacity review £(16.9)m Remeasurement of contingent consideration £64.7m 52 25 360 4 3 326 93 (23) (34) 259 206 PBT Food Clothing Ocado International All

  14. Slide 14: Cash Flow and Change in Net Debt

    RESHAPING M&S STRATEGY DELIVERS STRONG RESULTS CASH FLOW AND CHANGE IN NET DEBT £m WORKING CAPITAL 669 Increase in payables £139m Increase in stock £(249)m Increase in receivables £(25)m (165) 2 (135) LEASE DEBT Decrease in lease obligations £115.3m New lease commitments £(67.3)m Other £(0.4)m (190)

  15. Slide 15: Capital Expenditure in Three Key Investment Areas

    RESHAPING M&S STRATEGY DELIVERS STRONG RESULTS CAPITAL EXPENDITURE IN THREE KEY INVESTMENT AREAS CAPEX PRE-DISPOSALS IN H1 23/24 £180m 54 New UK stores Accelerating store rotation 14 UK store remodelling Property asset 49 replacement Modernised 24 Supply Chain Supply Chain Data, Digital IT and M&S.c

  16. Slide 16: Disciplined Capital Allocation

    RESHAPING M&S STRATEGY DELIVERS STRONG RESULTS DISCIPLINED CAPITAL ALLOCATION 1 Focus on cash flow generation 2 Balance sheet management Invest for growth and structural 3 cost reduction Maintain and achieve investment grade credit 4 metrics and rating 5 Returns to shareholders – dividend restored 1

  17. Slide 17: Stuart Machin, Chief Executive

    STUART MACHIN CHIEF EXECUTIVE M&S COLLECTION Men's Mono Check Family Christmas Pyjama Set, £30.00 Women's Mono Check Family Christmas Short Nightshirt, £20.00 17 Kids' Fleece Mono Check Family Christmas Oversized Hoodie (3-16 Yrs), £18.00

  18. Slide 18: Outlook and Guidance for FY 2023/24

    RESHAPING M&S STRATEGY DELIVERS STRONG RESULTS OUTLOOK AND GUIDANCE FOR FY 2023/24 Trading momentum has been maintained through October and we are planning for a good Christmas Outlook remains uncertain with probable impact from deflation, interest rates, geopolitical events and erratic weather We w

  19. Slide 19: Appendices

    APPENDICES M&S COLLECTION Satin Cosmic Pyjamas with Eye Mask (6-13 Yrs), £25.00 M&S FOOD Satin Pyjamas with Eye Mask (6-16 Yrs), £25.00 Camembert with Chorizo Crumb, £5.50

  20. Slide 20: Trading Performance in Food

    RESHAPING M&S STRATEGY DELIVERS STRONG RESULTS TRADING PERFORMANCE IN FOOD FOOD SALES % Change from 22/23 Q1 Q2 HY Total Food1 15.1 14.2 14.7 LFL 12.5 11.0 11.7 1 H1 Food sales include an estimated 2.2% positive impact from the Gist third party sales DRIVERS OF FOOD SALES 26 Weeks Ended 30 Sept 23 1

  21. Slide 21: Food Operating Profit Performance

    RESHAPING M&S STRATEGY DELIVERS STRONG RESULTS FOOD OPERATING PROFIT PERFORMANCE HY HY Change £m 23/24 22/23 vs. 22/23 Sales 3,803.6 3,317.5 14.7% Operating profit before 164.9 71.8 129.7% adjusting items Operating margin 4.3% 2.2% 210bps 21

  22. Slide 22: Food Operating Profit Margin Bridge

    RESHAPING M&S STRATEGY DELIVERS STRONG RESULTS FOOD OPERATING PROFIT MARGIN BRIDGE Operating profit margin before adjusting items % 22/23 2.2 Gross margin 0.65 Store staffing 0.55 Other store costs 0.15 Distribution and warehousing 0.25 Central Food costs 0.50 23/24 4.3 22

  23. Slide 23: Trading Performance in Clothing & Home

    RESHAPING M&S STRATEGY DELIVERS STRONG RESULTS TRADING PERFORMANCE IN CLOTHING & HOME DRIVERS OF ONLINE SALES 26 Weeks Ended 30 Sept 23 1 Oct 22 % Change Traffic (m) 234.8 203.7 15.3 CLOTHING & HOME SALES Conversion (%) 6.3 7.0 -70bps % Change from 22/23 Q1 Q2 HY Average order value (£) 66.12 64.04

  24. Slide 24: Clothing & Home Operating Profit Performance

    RESHAPING M&S STRATEGY DELIVERS STRONG RESULTS CLOTHING & HOME OPERATING PROFIT PERFORMANCE HY HY Change £m 23/24 22/23 vs. 22/23 Sales 1,849.5 1,749.7 5.7% Operating profit before adjusting items 223.4 171.4 30.3% Operating margin 12.1% 9.8% 230bps M&S Kids’ Wear Newness Tech Cargo Trouser (6-16 Yr

  25. Slide 25: Clothing & Home Operating Profit Margin Bridge

    RESHAPING M&S STRATEGY DELIVERS STRONG RESULTS CLOTHING & HOME OPERATING PROFIT MARGIN BRIDGE Operating profit margin before adjusting items % 22/23 9.8 Gross margin 0.9 Store staffing 0.2 Other store costs 1.0 Distribution and warehousing 1.0 Central C&H costs (0.8) 23/24 12.1 M&S COLLECTION 25 Seq

  26. Slide 26: International Performance

    RESHAPING M&S STRATEGY DELIVERS STRONG RESULTS INTERNATIONAL PERFORMANCE TOTAL INTERNATIONAL Change £m HY 23/24 HY 22/23 vs. 22/23 Sales 511.3 496.4 3.0% Operating profit before adjusting items 43.4 39.0 11.3% Operating margin 8.5% 7.9% 60bps INTERNATIONAL EXCLUDING ROI Change £m HY 23/24 HY 22/23 v

  27. Slide 27: Ocado Retail Results - M&S Share

    RESHAPING M&S STRATEGY DELIVERS STRONG RESULTS OCADO RETAIL RESULTS - M&S SHARE 26 w/e 26 w/e Change £m 27 Aug 23 28 Aug 22 £m Revenue 1,164.4 1,089.0 75.4 EBITDA before exceptional items 5.3 9.8 (4.5) Exceptional items1 (33.4) 31.2 (64.6) Depreciation and amortisation (31.2) (28.5) (2.7) Operating

  28. Slide 28: Adjusting Items

    RESHAPING M&S STRATEGY DELIVERS STRONG RESULTS ADJUSTING ITEMS £m Strategic programmes (70.6) UK store estate (67.1) Organisation (3.5) Structural simplification - UK logistics - Other adjusting items 36.0 Store impairments and other property charges - Acquisition of Gist Limited (0.4) Amortisation

  29. Slide 29: Quarterly Sales Performance vs. 22/23

    RESHAPING M&S STRATEGY DELIVERS STRONG RESULTS QUARTERLY SALES PERFORMANCE VS. 22/23 % Change to 22/23 Q1 Q2 HY Food 15.1 14.2 14.7 Food LFL 12.5 11.0 11.7 Clothing & Home 7.4 4.1 5.7 Clothing & Home LFL 7.2 3.8 5.5 Total UK Sales 12.5 10.6 11.6 Total UK LFL 10.7 8.5 9.6 International* 2.9 4.8 3.9 G

  30. Slide 30: Depreciation and Amortisation

    RESHAPING M&S STRATEGY DELIVERS STRONG RESULTS DEPRECIATION AND AMORTISATION HY 23/24 £m Food C&H Intl Other Group Adjusted operating profit 165 223 43 (21) 410 Depreciation Tangible asset 73 67 7 - 147 Right of use asset 43 29 12 - 84 Amortisation 10 12 3 - 25 Write-off and disposal costs - 4 (1) -

  31. Slide 31: Lease Liability Breakdown

    RESHAPING M&S STRATEGY DELIVERS STRONG RESULTS LEASE LIABILITY BREAKDOWN International 207 Office, Warehouse 877 475 Full Line & Other £2,244m HY 23/24 685 Simply Food 31 M&S Battersea

  32. Slide 32: Stores and Selling Space

    RESHAPING M&S STRATEGY DELIVERS STRONG RESULTS STORES AND SELLING SPACE NUMBER OF STORES Selling space Closures of UK (m sq. ft) Sept 23 Mar 23 Openings Closures which: Change Relocations Shopping Centre 1.6 17 16 1 - - 1 Retail Park 4.6 81 81 1 -1 -1 0 High Street – Large 4.6 69 71 1 -3 -1 -2 High

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