M&S Full-Year Results – What The Analysts Said

By Steve Wynne-Jones
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M&S Full-Year Results – What The Analysts Said

Earlier this week, Marks & Spencer reported full-year profit before tax of £522.9 million (€614.9 million), a 29.7% increase on the pre-pandemic period, with its food and Ocado Retail businesses performing strongly.

Commenting, outgoing chief executive Steve Rowe said, "For me, what is important about these results is not just the restoration of profit and strong cash flow; it is that they demonstrate that M&S has fundamentally changed."

Here's how leading industry analysts viewed its performance:

Ross Hindle, Third Bridge

“M&S produced a tasty set of results. M&S’s food offering continues to deliver for the group and our experts say it could be their secret weapon against the inflationary pressure set to rattle other supermarkets.

“M&S’s premium brand positioning means they are less vulnerable to the pressure from discounters and many of the shoppers they do lose will be replaced by new customers trading down from eating out. Also, the old habits of splitting grocery shopping between multiple supermarkets are back, now the need to do one big weekly shop and return home has dissipated with COVID.


“As M&S continues its transformation programme, benefits are expected to continue to flow to shareholders. However, one concern does remain around M&S’s clothing range which once again finds itself in no-mans land between affordable and premium clothing.”

Russ Mould, AJ Bell

“There was a chance that Steve Rowe would leave Marks & Spencer on a sour note, given the pressures on household finances and how that might have hurt sales. Fortunately, the retailer has pleasantly surprised with its full-year results showing resilience which the company arguably lacked before Rowe became the boss.

“The company has moved back into profit, and free cash flow has soared which has helped bring down net debt. Sadly, there is still no dividend for shareholders, but the direction of travel for the business is promising.

“Food has long been Marks & Spencer’s biggest strength and it has hit on a winning formula with its mixture of food-on-the-go products and items to eat at home which feel like a treat and a good alternative to going to a restaurant. It offers decent quality items, and the store layout and associated promotions successfully encourage people to walk away with more than they originally intended to buy.


“Rowe says he’s helped to fix the basics and put the company in a better position. Now it’s the turn of a new leadership team to sustain the positive momentum in the business and that won’t be easy, given the fragile economic backdrop."

Clive Black, Shore Capital

"Marks & Spencer has issued particularly good FY22 results, the last under CEO Steve Rowe's leadership. In another year of external volatility M&S has reported c£523m of Group CPTP (£463m excluding rates relief) so a little ahead of our estimate providing a firm core-UK base for FY23.

"However, due to Ocado Retail Limited margin weakness we shave our FY23 CPTP estimate to £415m from £430m, EPS 15.8p. Non-lease net debt of £420m displays solvency, liquidity and financial strength; which we think augurs well for the restoration investment grade status in due course. Whilst there are clear UK economic headwinds and particular concerns about Q4 CY22, the new leadership team faces the future alive to the necessary work to deliver sustainable growth from a superior operating base.

"M&S' equity has, to us, been pricing a major profit warning, we see a real value play equity with considerable upside."

© 2022 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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