Marks And Spencer Group Plc · LSE:MKS
Marks And Spencer — FY2023 Earnings Presentation
39 slides from Marks And Spencer's earnings presentation, May 24, 2023
Slide 1: Full Year Results: M&S Delivers Strong Results as It Reshapes for Growth
Full Year Results M&S DELIVERS STRONG RESULTS AS IT RESHAPES FOR GROWTH 24 MAY 2023 M&S Collection Pure Cotton Printed Maxi Tiered Dress £39.50
Slide 2: Stuart Machin, Chief Executive
STUART MACHIN Chief Executive M&S Collection Pure Cotton Cote d'Azur Graphic T-Shirt, £18.00 Pure Linen Shirt, £40.00 Pure Cotton Half Elasticated Waist Shorts, £30.00 2 Round Polarised Sunglasses, £15.00
Slide 3: Strong Results as M&S Reshapes for Growth
STRONG RESULTS AS M&S RESHAPES FOR GROWTH INVESTMENT IN TRUSTED VALUE DELIVERING GROWTH STRONG TRADING RESULTS Profit before tax and adjusting items £482.0m Food sales up 8.7%; investment in trusted value; strong growth in hospitality and franchise C&H sales up 11.5% with store sales up 14.9%, online
Slide 4: Reshaping M&S to Deliver Long-Term Growth
STRONG RESULTS AS M&S RESHAPES FOR GROWTH INVESTMENT IN TRUSTED VALUE DELIVERING GROWTH RESHAPING M&S TO DELIVER LONG-TERM GROWTH Clothing & Home delivering improved style perceptions and a sustained leading value position Food volume outperforms market; reflecting product innovation and value inves
Slide 5: Jeremy Townsend, Chief Financial Officer
JEREMY TOWNSEND Chief Financial Officer 5
Slide 6: Full Year Financials at a Glance
STRONG RESULTS AS M&S RESHAPES FOR GROWTH FULL YEAR FINANCIALS AT A GLANCE £12.0bn £475.7m £482.0m 9.9% 21.4% -7.8% Profit before tax Profit before tax and Group sales adjusting items £170.4m £355.6m £2.64bn Free cash flow Net debt Net debt from operations excluding leases M&S Collection Cotton Rich
Slide 7: Group Profit Bridge
STRONG RESULTS AS M&S RESHAPES FOR GROWTH GROUP PROFIT BRIDGE £m ADJUSTING ITEMS INCLUDE: Store Estate £(51)m Acquisition of Gist £(22)m 523 Remeasurement of Contingent Consideration £105m 28 482 476 463 (6) (60) 11 (5) (43) (13) 41 PBT UK PBT before Food1 Clothing Ocado International M&S Net PBT Ad
Slide 8: Trading Performance in Food
STRONG RESULTS AS M&S RESHAPES FOR GROWTH TRADING PERFORMANCE IN FOOD FOOD SALES % Change from 21/22 H1 H2 FY Total Food1 5.6 11.5 8.7 LFL 3.0 7.6 5.4 1 FY/H2 Food sales includes an estimated 1.3%/2.4% positive impact from the Gist third party sales DRIVERS OF FOOD SALES 52 Weeks Ended 1 Apr 23 2 Ap
Slide 9: Food Operating Profit Performance
STRONG RESULTS AS M&S RESHAPES FOR GROWTH FOOD OPERATING PROFIT PERFORMANCE FY FY Change £m H1 H2 22/23 21/22 vs. 21/22 Sales 3,317.5 3,900.5 7,218.0 6,639.6 8.7% Operating profit before 71.8 176.2 248.0 277.8 -10.7% adjusting items Operating margin 2.2% 4.5% 3.4% 4.2% -80bps Includes business rates
Slide 10: Food Operating Profit Margin Bridge
STRONG RESULTS AS M&S RESHAPES FOR GROWTH FOOD OPERATING PROFIT MARGIN BRIDGE Operating cost growth excluding business rates relief % Operating profit margin before adjusting items % Colleague pay, energy and other inflation 6.8 21/22 4.2 Growth 1.5 Business rates relief (0.4) Investments/other 1.8
Slide 11: Trading Performance in Clothing & Home
STRONG RESULTS AS M&S RESHAPES FOR GROWTH TRADING PERFORMANCE IN CLOTHING & HOME DRIVERS OF ONLINE SALES 52 Weeks Ended 1 Apr 23 2 Apr 22 % Change CLOTHING & HOME SALES Traffic (m) 446.5 405.7 10.1 Conversion (%) 6.7% 7.0% (30) bps % Change from 21/22 H1 H2 FY Average order value (£) 58.6 55.4 5.8 T
Slide 12: Clothing & Home Operating Profit Performance
STRONG RESULTS AS M&S RESHAPES FOR GROWTH CLOTHING & HOME OPERATING PROFIT PERFORMANCE FY FY Change £m H1 H2 22/23 21/22 vs. 21/22 Sales 1,749.7 1,965.3 3,715.0 3,332.2 11.5% Operating profit before 171.4 152.4 323.8 330.7 -2.1% adjusting items Operating margin 9.8% 7.8% 8.7% 9.9% -120bps Includes b
Slide 13: Clothing & Home Operating Profit Margin Bridge
STRONG RESULTS AS M&S RESHAPES FOR GROWTH CLOTHING & HOME OPERATING PROFIT MARGIN BRIDGE Operating cost growth excluding business rates relief % Operating profit margin before adjusting items % Colleague pay, energy and other inflation 4.1 21/22 9.9 Growth 2.7 Business rates relief (1.0) Investments
Slide 14: International Performance
STRONG RESULTS AS M&S RESHAPES FOR GROWTH INTERNATIONAL PERFORMANCE TOTAL INTERNATIONAL Change £m 22/23 21/22 vs. 21/22 Sales 1,055.0 937.2 12.6% Operating profit before 84.8 73.6 15.2% adjusting items Operating margin 8.0% 7.9% +10bps INTERNATIONAL EXCLUDING ROI Change £m 22/23 21/22 vs. 21/22 Sale
Slide 15: Ocado Contribution to M&S
OCADO CONTRIBUTION TO M&S SHARE OF (LOSS)/PROFIT 52 w/e 52 w/e Change £m 26 Feb 23 27 Feb 22 £m Revenue 2,222.0 2,248.8 (26.8) EBITDA before exceptional items (15.1) 104.8 (119.9) Exceptional items 21.2 (14.4) 35.6 Depreciation and amortisation (69.4) (41.3) (28.1) Operating (loss)/profit (63.3) 49.
Slide 16: Cash Flow and Change in Net Debt Since Start of Year
STRONG RESULTS AS M&S RESHAPES FOR GROWTH CASH FLOW AND CHANGE IN NET DEBT SINCE START OF YEAR £m 1,150 (354) (10) (37) (409) (30) 67 170 (137) (70) 62 (107) (2) Adjusted Cash lease Working DB Capex Loan Financial Adjusting Other2 Free Cash Acquisitions, Increase in Change in EBITDA payments1 capita
Slide 17: Capital Expenditure Investment Areas
STRONG RESULTS AS M&S RESHAPES FOR GROWTH CAPITAL EXPENDITURE INVESTMENT AREAS CAPEX PRE-DISPOSALS IN 2022/23 CAPEX EXPECTATION FOR 2023/24 £403m c.£400m 55 New UK stores 90 New UK stores 70 UK store remodelling Accelerating Accelerating 30 UK store remodelling store rotation store rotation Property
Slide 18: Capital Allocation Priorities
STRONG RESULTS AS M&S RESHAPES FOR GROWTH CAPITAL ALLOCATION PRIORITIES 1 Focus on cash flow generation Invest for growth and structural cost 2 reduction Balance sheet management – maintain and 3 achieve investment grade credit metrics and rating 4 Restore the dividend 18
Slide 19: Outlook and Guidance for 2023/24
STRONG RESULTS AS M&S RESHAPES FOR GROWTH OUTLOOK AND GUIDANCE FOR 2023/24 Good start to the financial year with both Food and C&H in growth, but given uncertain outlook, expect market conditions to become more challenging Modest growth in revenues driven by omni-channel growth and store rotation In
Slide 20: Stuart Machin, Chief Executive
STUART MACHIN Chief Executive 20
Slide 21: Transformation Priorities Helping to Reshape M&S
STRONG RESULTS AS M&S RESHAPES FOR GROWTH TRANSFORMATION PRIORITIES HELPING TO RESHAPE M&S EXCEPTIONAL PRODUCT, STRUCTURALLY LOWER COST TRUSTED BRAND BASE LEADING IN OMNI-CHANNEL HIGH PERFORMANCE CULTURE EXPANDED GLOBAL REACH DELIVER IMPROVE PROFITABLE SALES OPERATING growth margins DISCIPLINED DRIV
Slide 22: Clothing & Home Building Style Credentials
STRONG RESULTS AS M&S RESHAPES FOR GROWTH CLOTHING & HOME BUILDING STYLE CREDENTIALS CASUAL CATEGORIES DRIVING GROWTH Sales vs. 21/22 40% 34% CONFIDENT BUYING DRIVING IMPROVED SALES Buying deeply into core lines; women’s denim share 13% 20% Investing in areas critical to style perception Digital ana
Slide 23: Food Driven by Investment in Innovation & Value
STRONG RESULTS AS M&S RESHAPES FOR GROWTH FOOD DRIVEN BY INVESTMENT IN INNOVATION & VALUE TRUSTED VALUE RANGES GROWING Sales vs. 21/22 68% FURTHER INVESTMENT IN TRUSTED VALUE Protecting customers through limiting price inflation 41% Remarksable, Price Lock and Dine-In investment increased 23% Mix of
Slide 24: Katie Bickerstaffe, Co-Chief Executive
KATIE BICKERSTAFFE Co-Chief Executive M&S Collection Cotton Rich Textured Knitted Vest, £27.50 Denim High Waisted Bermuda Shorts, £29.50 24 Leather Weave Jean Belt, £19.50
Slide 25: Click & Collect Sales Support Growth in C&H Online
STRONG RESULTS AS M&S RESHAPES FOR GROWTH CLICK & COLLECT SALES SUPPORT GROWTH IN C&H ONLINE GROWTH IN ACTIVE SPARKS USERS AND APP SALES ONLINE GROWTH WITH CLICK & COLLECT STRENGTH 5.4 Online sales grew 4.8% despite challenging comparatives 4.6 34% Click and Collect continues to grow; +20% year-on-y
Slide 26: Ocado Retail Reset, M&S Food in Growth
STRONG RESULTS AS M&S RESHAPES FOR GROWTH OCADO RETAIL RESET, M&S FOOD IN GROWTH ACTIVE CUSTOMERS CONTINUE TO GROW Average Active Customers at Year End (000’s) RESETTING THE CUSTOMER PROPOSITION 'Perfect Execution' focus to improve customer service Investing in value to broaden appeal 22/23 957 Work
Slide 27: Expanding Global Reach Through Strong Partnerships
STRONG RESULTS AS M&S RESHAPES FOR GROWTH EXPANDING GLOBAL REACH THROUGH STRONG PARTNERSHIPS FRANCHISE SHIPMENTS AHEAD OF RETAIL SALES 8% 7% 6% DEMAND RECOVERY ACROSS PARTNER MARKETS 4% 4% Partner sales driven by C&H; total retail sales +8% Strong partner sales in the Middle East and Asia 2% Resilie
Slide 28: Stuart Machin, Chief Executive
STUART MACHIN Chief Executive 28
Slide 29: Structurally Reducing Costs
STRONG RESULTS AS M&S RESHAPES FOR GROWTH STRUCTURALLY REDUCING COSTS ALREADY ACHIEVING TARGET RETAIL COST TO SERVE Cost to Serve % of Sales 12% INCREASING RETAIL EFFICIENCY 70% food transactions self-serve in self-checkout stores 11% Implementing efficient labour scheduling process 10% Investing to
Slide 30: Creating a Culture of Delivery
STRONG RESULTS AS M&S RESHAPES FOR GROWTH CREATING A CULTURE OF DELIVERY CLOSER TO COLLEAGUES AND SIMPLER, FASTER ORGANISATION CUSTOMERS Substantial investment in pay & reward Digital leadership reset Working between stores and offices to Technology, digital product and data increase efficiency team
Slide 31: Making Disciplined Investment Choices
STRONG RESULTS AS M&S RESHAPES FOR GROWTH MAKING DISCIPLINED INVESTMENT CHOICES WHAT ROTATION ACHIEVES: CHESTERFIELD EXAMPLE Old New 21/22 22/23 ACCELERATING STORE ROTATION Actuals to Date* Creating high productivity stores in growth locations 20.7 +65% 8 new full-line shops & 10 food stores in the
Slide 32: Driving Shareholder Returns – Plan to Restore Dividend
STRONG RESULTS AS M&S RESHAPES FOR GROWTH DRIVING SHAREHOLDER RETURNS – PLAN TO RESTORE DIVIDEND NET DEBT CONTINUING TO REDUCE £bn £4.0 £3.5 FOCUS ON CASH FLOW GENERATION £2.7 £2.6 Prioritising generation of cash flow Investing in growth and structural cost reduction £1.4 £1.1 Hurdle rates commensur
Slide 33: Reshaping M&S for Growth
STRONG RESULTS AS M&S RESHAPES FOR GROWTH RESHAPING M&S FOR GROWTH DELIVERED STRONG RESULTS Plans to reshape M&S beginning to drive performance Customers thinking about M&S differently; greater value in Food, improving style in C&H Inspiring omni-channel renewal stores; opportunity for M&S growth th
Slide 34: Appendices
APPENDICES M&S Collection Pure Cotton Bardot Beach Top, £35 Woven Tote Bag, £29.50
Slide 35: Adjusting Items
STRONG RESULTS AS M&S RESHAPES FOR GROWTH ADJUSTING ITEMS £m Strategic programmes UK store estate (51.3) Structural simplification (16.4) Organisation (10.7) UK logistics (10.5) Other adjusting items Store impairments & other property charges 15.1 Acquisition of Gist Limited (22.1) Amortisation and
Slide 36: Quarterly Sales Performance vs. 21/22
STRONG RESULTS AS M&S RESHAPES FOR GROWTH QUARTERLY SALES PERFORMANCE VS. 21/22 % change to 21/22 Q1 Q2 Q3 Q4 FY Food 6.6 4.5 10.2 13.2 8.7 Food LFL 3.4 2.5 6.3 9.2 5.4 Clothing & Home 18.2 10.3 8.8 10.2 11.5 Clothing & Home LFL 17.6 10.2 8.6 9.6 11.2 Total UK Sales 10.3 6.5 9.7 12.3 9.6 Total UK LF
Slide 37: Depreciation and Amortisation
STRONG RESULTS AS M&S RESHAPES FOR GROWTH DEPRECIATION AND AMORTISATION FY 22/23 £m Food C&H Intl Other Group Adjusted operating profit 248 324 85 (30) 627 Depreciation Tangible asset 112 143 13 - 268 Right of use asset 85 56 25 - 166 Amortisation 33 48 6 - 87 Write off & disposal costs 11 (6) (3) -
Slide 38: Lease Liability Breakdown
STRONG RESULTS AS M&S RESHAPES FOR GROWTH LEASE LIABILITY BREAKDOWN International 205 Office, Warehouse & Other 495 909 Full Line £2,282m FY 22/23 673 Simply Food 38 M&S Stevenage
Slide 39: Stores and Selling Space
STRONG RESULTS AS M&S RESHAPES FOR GROWTH STORES AND SELLING SPACE NUMBER OF STORES Closures of UK Selling space (m sq. ft) Mar 23 Mar 22 Openings Closures which: Change Relocations Shopping Centre 1.5 16 16 0 0 0 0 Retail Park 4.5 80 77 3 0 0 3 High Street – large 4.8 71 74 0 (3) 0 (3) High Street
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