TIDMMKS
RNS Number : 3818W
Marks & Spencer Group PLC
18 August 2020
MARKS AND SPENCER GROUP PLC
M&S TRADING UPDATE AND STREAMLINING ANNOUNCEMENT
At the year-end M&S outlined a possible scenario for a
12-month Covid impacted trading period and set out a strengthened
liquidity and balance sheet platform for recovery. We also outlined
the 'Never the Same Again' programme for accelerating
transformation and capitalising on the learning from the crisis to
deliver three years change in one. Today we are updating the market
on revenue performance since year end and announcing further
proposed steps to accelerate change.
TRADING UPDATE
Overall the group year to date has performed ahead of the
scenario we announced at the year-end in revenue and cash. However
at this early stage there remains substantial uncertainty about
market conditions and the duration of social distancing measures,
and we are retaining a cautious approach to planning for the
balance of the year.
Food business showing good year on year growth
M&S Food sales have built steadily from the shifts in demand
and closure of travel locations at the outset of the crisis. In the
last 13 weeks total Food sales have increased 2.5%. In that same
period like for like sales excluding the impact of the closure of
hospitality and travel franchise units were up 10.6%, with an
improving trend as more locations recover and performance has
regained momentum as customers have bought back into our quality,
fresh food offer and investment in range and trusted value.
The transition to taking over the supply agreement with Ocado
Retail is on track for September and we are beginning to see the
benefits as planned in the form of trading terms and the launch of
over 500 new products in M&S stores from the expanded online
range created for the switchover.
We are making good progress in our 'Vangarde' supply chain
effectiveness programme working with our logistics partner GIST,
along with the new ambient food warehouse in Milton Keynes with our
partner XPO Logistics.
Clothing & Home significantly down but improving
Total revenue was down 38.5% in the last 13 weeks. In the 8
weeks since store re-opening total sales have been down 29.9% with
trends steadily improving. In those 8 weeks store sales were down
47.9% and online has continued to perform strongly up 39.2% on last
year.
The performance of store sales has varied widely across the
estate with some of the newer out of town stores trading close to
last year's level of sales overall in recent weeks but legacy town
centre stores and some shopping centres still heavily impacted by
social distancing and reduced footfall. Furthermore, with the
closure of many workplaces and lack of social gatherings, the
clothing sales mix has seen a substantial shift from office
dressing and formal wear into casual clothing and leisure wear.
Through upweighted promotional activity we have made good
progress in clearing surplus stock. As announced at the year-end we
have booked additional storage space to hibernate surplus good
stock for next year.
Online and digital accelerating
A central plank of our transformation strategy is to deliver a
much higher proportion of sales through digital channels and
relaunch our data and CRM platform under the Sparks banner. Online
Clothing & Home sales have performed strongly since the start
of the year with an additional 1.9m new customers. In the last 8
weeks, online sales have represented 41% of our total Clothing
& Home sales.
There has been a substantial change in delivery mix, with c. 68%
of orders delivered to home, compared with 29% the previous year.
Growth has been enabled by a robust performance from our Castle
Donington distribution centre, where the group has invested in
substantial additional capacity.
Following a successful relaunch in July, 8.2m customers are now
members of the new Sparks programme and over 800,000 have
downloaded the M&S App since launch.
International trends volatile
International sales have performed ahead of the Covid-19
scenario, primarily driven by strong online sales and an
improvement in franchise shipments in recent weeks, although it is
too early to know if this will be sustained. Trading in a number of
markets has been volatile with the re-imposition of local lockdowns
and closures affecting trade.
NEXT STEPS ON STREAMLINING THE BUSINESS
We are today announcing important proposals to further
streamline the business both at stores and management level.
As previously outlined Clothing & Home trading in the stores
remains well below last year, with online and home delivery strong.
It is clear that there has been a material shift in trade and
whilst it is too early to predict with precision where a new post
Covid sales mix will settle, we must act now to reflect this
change.
We have also learnt that we can work more flexibly and
productively with more colleagues multi-tasking and transitioning
between Food and Clothing & Home. The deployment of our leading
store technology package developed in partnership with Microsoft
has also enabled us to reduce layers of management and overheads in
the support office.
As a result we are today embarking on a multi-level consultation
programme which we anticipate will result in a reduction of c.
7,000 roles over the next 3 months. These will include departures
in our central support centre, in regional management, and in our
UK stores, reflecting the fact that the change has been felt
throughout the business.
We expect a significant proportion will be through voluntary
departures and early retirement. In line with our longstanding
value of treating our people well, we will now begin an extensive
programme of communication with colleagues.
Concurrently we expect to create a number of new jobs as we
invest in online fulfilment and the new ambient food warehouse and
reshape our store portfolio over the course of the year.
The cost of the programme including redundancies will be
reflected in a significant adjusting item to be included in the
group's half-year results. The streamlining programme is an
important step in delivering on our cost savings programme and
ensuring we emerge from the crisis with a lower cost base and a
stronger more resilient business.
Chief Executive Steve Rowe commented:
"In May we outlined our plans to learn from the crisis,
accelerate our transformation and deliver a stronger, more agile
business in a world in which some customer habits were changed
forever. Three months on and our Never the Same Again programme is
progressing; albeit the outlook is uncertain and we remain
cautious. As part of our Never The Same Again programme to embed
the positive changes in ways of working through the crisis, we are
today announcing proposals to further streamline store operations
and management structures. These proposals are an important step in
becoming a leaner, faster business set up to serve changing
customer needs and we are committed to supporting colleagues
through this time."
Group revenue: constant currency
8 weeks to
19 weeks to 13 weeks to 8 August
% change to LY 8 August 20(1) 8 August 20(1) 20(1)
------------------------------------------------ ---------------- ---------------- ----------
Clothing & Home -49.5 -38.5 -29.9
Food -1.1 2.5 2.5
International -31.9 -24.6 -19.9
Group -19.2 -13.2 -10.0
Clothing & Home.com 32.0 42.2 39.2
M&S.com 38.9 46.9 40.7
1. unaudited revenue for the:
- 19 week period from 29 March 2020 to 8 August 2020
- 13 week period from 10 May 2020 to 8 August 2020 (since last
reported)
- 8 week period from 13 June 2020 to 8 August 2020 (since
C&H space fully reopened)
This announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014.
-Ends-
Statements made in this announcement that look forward in time
or that express management's beliefs, expectations or estimates
regarding future occurrences and prospects are "forward-looking
statements" within the meaning of the United States federal
securities laws. These forward-looking statements reflect Marks
& Spencer's current expectations concerning future events and
actual results may differ materially from current expectations or
historical results. Any forward-looking statements are subject to
various risks and uncertainties, including, but not limited to,
failure by Marks & Spencer to predict accurately customer
preferences; decline in the demand for products offered by Marks
& Spencer; competitive influences; changes in levels of store
traffic or consumer spending habits; effectiveness of Marks &
Spencer's brand awareness and marketing programmes; general
economic conditions or a downturn in the retail or financial
services industries; acts of war or terrorism worldwide; work
stoppages, slowdowns or strikes; and changes in financial and
equity markets. For further information regarding risks to Marks
& Spencer's business, please consult the risk management
section of the 2020 Annual Report (pages 33-43).
The forward-looking statements contained in this document speak
only as of the date of this announcement, and Marks & Spencer
does not undertake to update any forward-looking statement to
reflect events or circumstances after the date hereof or to reflect
the occurrence of unanticipated events.
For further information, please contact:
Investor Relations:
Fraser Ramzan: +44 (0) 20 3884 7080
Hannah Chambers: +44 (0) 20 3882 4714
Media enquiries:
Corporate Press Office: +44 (0) 20 8718 1919
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
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of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
UPDKZGMRLNLGGZM
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August 18, 2020 02:00 ET (06:00 GMT)
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