Marks & Spencer Full-Year Results: What The Analysts Said

By Steve Wynne-Jones
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Marks & Spencer Full-Year Results: What The Analysts Said

Marks & Spencer has posted full-year revenue of £10.38 billion (€11.79 billion) in its full year to 30 March – a decline of 3.0% on the previous period.

Commenting on its performance, Steve Rowe, Marks & Spencer’s chief executive, said that the group was “deep into the first phase of our transformation programme, and continue to make good progress restoring the basics and fixing many of the legacy issues we face.”

Here’s how leading retail analysts viewed its performance.

Fiona Cincotta,

“Marks & Spencer has posted a result in line with market expectations, just at it prepares to stick its hand out to investors for more money, but – although these results aren’t as bad as some may have feared – they are by no means strong.

“Sales are continuing to slide at both the clothing and food divisions at alarming rates, while management has guided for margins to shrink at both divisions in the current financial year. The company’s uncertain future is reflected in the eye-watering deep discount that has been applied to the capital-raising.


“Management is at least in the right head space by cutting the dividend and giving more priority to investment. The Ocado deal may well offer this increasingly irrelevant old retailer a new lease on life, but the size of the discount on the equity-raising will only stoke concerns that M&S has paid too much. Investors will have to wait until the back end of next year to see if the deal can start bearing the requisite fruit.”

David Beadle, Moody’s

“M&S’s results are broadly in line with our expectations, and credit metrics remain solid for the Baa3 rating, even though Moody’s adjusted gross leverage has edged up to about 3.5 times. The rights issue and dividend cut are both credit positive, although we believe some like-for-like sales growth, evidencing successful progress on the company’s multi-year transformation plan, will be important if the company is to maintain credit quality.”

Russ Mould, AJ Bell

“Some stocks feel like they are permanently in turnaround mode, and high-street stalwart Marks & Spencer certainly falls into that category. A succession of chief executives have tried and largely failed to restore its clothing division to former glories, even if the food business has been a relative light amid the gloom.

“Little wonder, then, that investors’ patience is starting to wear thin, as these latest full-year results see performance constrained by its restructuring efforts. While the latest incumbent of the CEO’s seat – Steve Rowe – says the company is judging itself as much on the pace of change as trading outcomes, the market clearly sees things a little differently.


“The numbers are also somewhat overshadowed by the £600 million rights issue being used to finance its joint venture with Ocado. This bold strategic step has not proved popular so far and necessitated the trailed cut to the full-year dividend. While its food arm has done well, it is not really a supermarket, and this does beg questions of how it will translate to an online delivery model, which most people currently use for their weekly shop.”

Catherine Shuttleworth, Savvy

“No surprises in the numbers this morning from M&S, but lowering sales continues to be an issue. Whilst Steve Rowe is at pains to tell us that success at M&S is not currently measured in numbers, but by the speed of change, there’s nowhere to hide from continued low penetration in online clothing of only 18% and a slowdown and like-for-like negatives in food.

“Whilst the ‘transformative’ Ocado joint venture is now moving forwards, there is clearly still a lot to fix in food, which M&S acknowledge. Having visited stores regularly and shopped there last week, it’s clear that it’s very much a work in progress, with new value communication sitting somewhat incongruously with some eye-watering pricing on brands, which will seriously confuse the shopper and, worryingly, put them off.

“Mr Rowe, this weekend, talked about making the business ‘special’ again, and whilst there are clearly mammoth cost savings to be made, it’s tricky to see where the special stuff is in M&S at the moment, and what the plan is to deploy that specialness to the shopper – and the thing is, shoppers won’t wait forever. The scale of this turnaround can’t be underestimated – as M&S advise, they have only just started showing store managers their own P&Ls.”


Clive Black, Shore Capital

“M&S has outlined the progress that it has made in ‘becoming a digital-first retailer’. Online sales in C&H grew by 9.8%, whilst the company reference notable improvements in the speed of its website, plus functional improvements.

“It faces into FY2020 with a near-complete leadership team, noting the recent retirement of its group human resources director, and comments in its results statement about the opening of new retail space in the UK alongside the rationalisation of footage that it no longer wishes to trade from, the ambition to ‘substantially’ increase food market share whilst also setting out much more work to do, including a modernisation of its Sparks loyalty scheme and the realisation of value from its real estate through the appointment of a new property development director.”

Thomas Brereton, GlobalData

“Given M&S’s eminence in UK retail, headlines will – at least for the next year – continue to focus on the rapid pace of store closures and M&S’s contribution to the high-street ‘apocalypse’, with a further 85 full-line and 25 Simply Food stores expected to close over the course of the next year, with focus remaining on becoming a ‘digital first’ retailer, with the upcoming restructuring of the Sparks loyalty scheme provided as an example.

“For investors, M&S’s potential slide out of the FTSE 100 provides yet another warning bell for physical retail: those who fail to adapt to consumers’ ever-changing demands will not survive against the backdrop of the more agile market players.”

© 2019 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: European Supermarket Magazine.

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