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Marks & Spencer Half-Year Results – What The Analysts Said

By Steve Wynne-Jones
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Marks & Spencer Half-Year Results – What The Analysts Said

Marks & Spencer has posted a 15.8% decline in group revenue in the first half of its financial year, with group operating profit down 77.1%.

Commenting on its performance, Steve Rowe, the retailer's chief executive, said, “In a year when it has become impossible to forecast with any degree of accuracy, our performance has been much more robust than at first seemed possible."

Here's how leading retail analysts viewed its performance.

David Beadle, Moody’s

“These results are stronger than we expected, particularly in Clothing & Home and notably in respect of the online segment. The company’s liquidity position remains good and it has managed stock levels successfully. However, while we expect the Food division to continue to perform well in the months ahead, the new lockdown will be a setback for Clothing & Home.

"This compounds uncertainties around the pace of recovery in 2021 in light of weak consumer sentiment, which is a key driver of the negative rating outlook.”


Clive Black, Shore Capital

"Another tumultuous period for M&S, albeit this time it is more about external factors than those of a company specific nature. That said, the burden of Lockdown I took a toll on the Group’s H1 FY2021 P&L, so a small adjusted loss, whilst the Group must face into Lockdown II in short order, alongside recession, Christmas trade and Brexit.

"Whilst there is plenty to ruminate on, we actually look at this set of results and give credit to M&S for being agile and effective in the most challenging of circumstances. Indeed, we are pleased to see the Group exceed its prior central sales scenario and to deliver a trading profit and free cash flow. Liquidity is good and with judicious capital expenditure and ongoing tight management, we believe that FY2021 net debt can remain not too far from the H1 level.

"M&S is demonstrably improving as a business across the board. Progress first came through in its International business followed by Food, where Vangarde is kicking in and there is clear pleasure around the Ocado Retail joint venture and the introduction of the M&S offer, work for which praise is due. More is still to do around the organisation though, its stores and C&H, but the heavy lifting feels like it has been undertaken and work in the digital sphere is leading to a more relevant and resilient business, manifested in the announcement of MS2."

Thomas Brereton, GlobalData

"M&S has swung to its first ever H1 loss as a publicly traded company with a post-tax loss of £71.6m (compared to a £122.4m profit in the same period last year). However, there are many aspects of its recent activity for M&S to be proud of, and its self-declaration of a 'robust performance' is a reasonable one. And so, despite the scars that COVID-19 has made on the business – particularly across its non-food divisions – M&S’s share price rose c.7% in early-morning trading on the back of a much more resilient set of results than expected.


"While still the outperforming sector of the business, M&S food has struggled to gain the traction that other food retailers have seen this year. Badly hit sectors and categories – notably franchise travel locations and food-on-the-move product lines – have offset stronger performances across retail park locations and Simply Food outlets.

"Of course, there is significant comfort in its tie-up with Ocado – a move pre-coronavirus that raised questions, but, in the face of explosive demand for grocery home delivery, appears to now be an inspiring move. Ocado sales are up c.50% this year, and improved profitability at the pureplay means that M&S received a welcoming £38.8m in profit over the period from its share of the business."

© 2020 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: The European Supermarket Magazine.

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