Marks And Spencer Group Plc · LSE:MKS
Marks And Spencer — FY2019/20 Earnings Presentation
31 slides from Marks And Spencer's earnings presentation, May 20, 2020
Slide 1: Final Results 20 May 2020
FINAL RESULTS 20 MAY 2020 All profits and VAT from the sale of this T-Shirt will be donated to support NHS staff and volunteers caring for Covid-19 patients
Slide 2: Agenda
We’re all in this together AGENDA Business Never the Review of response to Same Again results of Covid-19 and programme transformation liquidity planning to accelerate for 2019/20 for the crisis change STEVE ROWE CHIEF EXECUTIVE M&S COLLECTION Pure Cotton Collared Sleeveless Shirt £12.50
Slide 3: Progress on Transformation in 2019/20
We’re all in this together PROGRESS ON TRANSFORMATION IN 2019/20 Adjusted profit of £403m with estimated adverse Covid-19 impact in March of c.£52m Good progress against key elements of transformation programme prior to Covid-19 impact in March Valuable investment in Ocado Retail, positioning the bu
Slide 4: Outperforming in Food
We’re all in this together OUTPERFORMING IN FOOD IMPROVING REVENUE PERFORMANCE Volume growth of 3.3%, ahead of the market Jan/Feb Q4 FY Broader appeal through trusted value with Total 4.1% 4.8% 2.1% 30% reduction in sales on promotions LFL 3.7% 4.6% 1.9% Launch of ‘Remarksable’ value and ‘Fres
Slide 5: Re-engineering Clothing & Home
We’re all in this together RE-ENGINEERING CLOTHING & HOME IMPROVING PERFORMANCE PRE COVID-191 Year of substantial reshaping with improved performance in H2 supported Jan/Feb Q4 FY by stronger availability Total -1.7% -15.7% -8.3% Reduced options for A/W by 11% and focused on hero categories back
Slide 6: Changing the Model in International
We’re all in this together CHANGING THE MODEL IN INTERNATIONAL STRONGER SHIPMENTS PRE COVID-191 Moved from direct ownership to largely franchise and JV model Jan/Feb Q4 FY More relevant more often with focus on Owned -1.2% -13.1% -2.3% local events and product designed for the local market Franc
Slide 7: 2019/20 Financials at a Glance
We’re all in this together 2019/20 FINANCIALS AT A GLANCE Group revenue Profit before tax Profit before tax & adjusting items £10.2bn £403.1m £67.2m -1.9% -21.2% -20.2% Free cashflow Net debt Dividend per share £4.03bn -1.2% £225.0m Net debt excluding 3.9p DAVID SURDEAU -61.3% lease liabilities -70.
Slide 8: Food Performance
We’re all in this together FOOD PERFORMANCE OPERATING PROFIT OPERATING MARGIN £M 19/20 18/19 % 18/19 3.6% Revenue 6,028 5,903 2.1 Gross margin -50bps Adjusted operating profit 237 213 11.2 Store staffing +30bps Operating margin 3.9% 3.6% Other store costs +30bps Distribution & warehousing -20bps Cen
Slide 9: Clothing & Home Performance
We’re all in this together CLOTHING & HOME PERFORMANCE OPERATING PROFIT1 OPERATING MARGIN £M 19/20 18/19 % 18/19 10.1% Revenue 3,209 3,500 -8.3 Gross margin -120bps Adjusted operating profit 224 355 -37.0 Store staffing -50bps Operating margin 7.0% 10.1% Other store costs -60bps 1 Prior year revenue
Slide 10: International Performance
We’re all in this together INTERNATIONAL PERFORMANCE REVENUE1 OPERATING PROFIT £M 19/20 18/19 cc% £M 19/20 18/19 % Franchise 393 409 -3.8 Franchise 64.9 72.3 -10.2 Owned 552 565 -1.6 Owned 56.7 70.8 -19.9 Total 945 974 -2.5 Corp costs (10.9) (12.6) 13.5 1 Prior year revenue and operating margin has
Slide 11: Profit Bridge
We’re all in this together PROFIT BRIDGE £M 24 512 26 403 (131) (20) (8) (213) 67 (123) Adjusted Food C&H International Other Net Adjusted Covid-19 Other PBT PBT finance PBT 19/20 18/19 cost 19/20 OPERATING PROFIT ADJUSTING ITEMS Pure Cotton Floral Shirred Bardot Dress £14.00
Slide 12: Total EBITDA of £1.2bn and Reduction in Net Debt
We’re all in this together TOTAL EBITDA OF £1.2BN AND REDUCTION IN NET DEBT £M 1,223 (336) (49) (38) OCADO Investment in Ocado £(577.8)m Proceeds from rights issue £574.4m (326) LEASE DEBT 10 New lease commitments £(204)m (171) 225 Decrease in lease obligations £201m (88) 19 53 50 (191) (3) Adjusted
Slide 13: Steve Rowe, Chief Executive
STEVE ROWE CHIEF EXECUTIVE gisszeue
Slide 14: Planning Liquidity Under Covid-19 Scenario
We’re all in this together PLANNING LIQUIDITY UNDER COVID-19 SCENARIO SCENARIO PLANNING COVID-19 SCENARIO UK Clothing & Home; 70% revenue decline until View from the outset that the direct impact July, with gradual return to budgeted levels from the crisis will last through the year UK Food; 20% rev
Slide 15: Costs and Cash Actions in Excess of £1bn
We’re all in this together COSTS AND CASH ACTIONS IN EXCESS OF £1BN COST REDUCTIONS GOVERNMENT MEASURES Clothing & Home marketing £50m Business rates relief £172m Deferred pay increase, recruitment and technology £80m Furlough receipts £50m Lower Clothing & Home logistics £60m CASH MANAGEMENT ACTION
Slide 16: Group Cash and Available Credit Facilities
We’re all in this together GROUP CASH AND AVAILABLE CREDIT FACILITIES Negotiated significant relaxation/waiver DRAWDOWN AND HEADROOM UNDER SCENARIO of covenants on £1.1bn RCF at next three tests £M drawdown 1600 1400 RCF + CCFF Confirmed as eligible issuer under the 1200 Government’s CCFF programme
Slide 17: Actions to Manage Clothing & Home Stock Flow
We’re all in this together ACTIONS TO MANAGE CLOTHING & HOME STOCK FLOW CLOTHING & HOME STOCK FLOW Cancelled c.£100m of orders and radically reduced future intake £M 560 Written down prior season stock and (100) assumed deeper sale and reduced sell through (231) 495 (145) 181 Hibernate 398 Hibernate
Slide 18: Recent Trading Performance
We’re all in this together RECENT TRADING PERFORMANCE TRADE PERFORMANCE SINCE MARCH Store sales in Clothing & Home substantially reduced % total sales ex. VAT QTD 60 40 19.9 Online sales up 19.9%, recovering after 20 6.4 lockdown and now performing strongly 0 -20 -8.8 -40 -51.3 -60 Food performance
Slide 19: Never the Same Again
We’re all in this together NEVER THE SAME AGAIN LESSONS FROM THE CRISIS Execute faster with smaller executive team Deploy store colleagues and operate flexibly across Clothing & Home and Food Think like a ‘pure play’ to accelerate online growth Devolve additional responsibility to sourcing offices a
Slide 20: Our Priorities
We’re all in this together OUR PRIORITIES Faster Food Turbocharge Capture Simplify Store estate growth with growth at value in Food range and for the new Ocado Retail M&S.com supply chain value in C&H world
Slide 21: Faster Food Growth with Ocado Retail
We’re all in this together FASTER FOOD GROWTH WITH OCADO RETAIL Launching in September with over 6,000 M&S Food lines including 1,000 newly developed products Adding c.1,600 Clothing & Home lines on Ocado to drive online growth Ocado Erith CFC Switchover on track with planned synergies of £70m by 20
Slide 22: Turbocharge Growth at M&S.com
We’re all in this together TURBOCHARGE GROWTH AT M&S.COM Integrated digital, data and technology team to accelerate online growth Drive customer acquisition and growth momentum through relaunch of Sparks and developing payment options SEO war room and targeting a doubling of app users with 450,000 a
Slide 23: Capture Value in Food Supply Chain
We’re all in this together CAPTURE VALUE IN FOOD SUPPLY CHAIN Major opportunity in Food supply chain to improve efficiency and drive sales Vangarde programme is optimising processes in the end to end supply chain to deliver more productive stores Vangarde store, York Now rolled out to 90 stores from
Slide 24: Simplify Range and Value in C&H
We’re all in this together SIMPLIFY RANGE AND VALUE IN C&H Deeper focus on ‘hero’ categories such as denim and knitwear with market leading shares Simpler ranges, concentrated supply base and more involvement by sourcing offices Ambition to reduce A/W SKUs substantially resulting in 30% cut over 2 y
Slide 25: Store Estate for the New World
We’re all in this together STORE ESTATE FOR THE NEW WORLD Rapid assessment of store portfolio for a post Covid-19 world Closures on track – 54 shared stores already closed out of existing 110 store plan Yorkshire Street Rochdale closed on April 5 2020 Never a better time to relocate off pitch stores
Slide 26: Never the Same Again
We’re all in this together NEVER THE SAME AGAIN Year of progress and change with transformative investment in Ocado Retail, outperformance in Food and green shoots in Clothing in H2 Scenario planning for a deep crisis from the start to ensure comfortable liquidity headroom Robust trade and cash outp
Slide 27: Q&A
Slide 28: Appendix 20 May 2020
APPENDIX 20 MAY 2020 All profits and VAT from the sale of this T-Shirt will be donated to support NHS staff and volunteers caring for Covid-19 patients
Slide 29: Adjusting Items
We’re all in this together ADJUSTING ITEMS Covid-19 related* £m Strategic programmes UK store estate (11.6) (29.3) Organisation (13.8) Operational transformation (11.6) IT restructure (0.4) UK logistics (10.2) Changes to pay and pensions (2.9) International closures (2.2) M&S Bank charges (12.6) Sto
Slide 30: Capital Expenditure Before Disposals
We’re all in this together CAPITAL EXPENDITURE BEFORE DISPOSALS £M 332 12 283 39 International 11 International Supply chain 49 102 12 Property maintenance 69 £332m 158 Food 60 162 19/20 UK store remodelling 26 Clothing New UK stores 40 33 & Home IT & M&S.com 88 85 18/19 19/20
Slide 31: Stores and Space
We’re all in this together STORES AND SPACE UK Mar 20 Mar 19 Openings Closures Change Shopping Centre 16 16 0 0 0 Retail Park 70 70 1 (1) 0 High Street – large 81 82 0 (1) (1) High Street 89 107 0 (18) (18) Outlets 32 34 0 (2) (2) Simply Food owned 310 301 11 (2) 9 Simply Food franchise 440 433 9 (2
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