Marks & Spencer (M&S) reported second quarter (Q2) and half year (H1) results for the 26 weeks ended 27 September 2014.

Group

H1 2014 Results

United Kingdom

H1 2014 sales increased 1% y-o-y to GBP4.9 million. LFL decreased 0.7%

  • General Merchandise (GM) sales decreased 2.3% y-o-y to GBP1.88 million. LFL decreased 2.9%
    • Clothing and footwear sales decreased 1.6% y-o-y. LFL decreased 2.2%
    • Performance was negatively impacted by unseasonal trading conditions in September.
    • Food sales increased 3.6% y-o-y to GBP2.5 million. LFL increased 1%.
      • M&S launched over 1,000 new lines during H1 2014.
      • International sales decreased 3.4% y-o-y to GBP533 million; at constant rate sales increased 1.2% y-o-y.
        • Operating profit reached GBP51.3 million.
        • The franchise business was impacted by lower shipments, coupled with currency and political issues in the Middle East.
        • Simply Food stores in Paris and Hong King delivered strong sales performance, in line with the best performing stores in the UK.
        • During the period, the retailer opened 23 new stores abroad, totaling 470 stores.
        • M&S.com sales decreased 6.3%.
  • Net profit reached GBP225.6 million
  • EBITDA grew from GBP37.7 million to GBP578.8 million
  • UK gross margin increased 50 basis points (bps) to 41.8%.
  • GM gross margin increased 150bps to 53.7%
  • Food gross margin increased 25bps to 32.7%.

Q2 2014 Results

  • Q2 2014 UK sales were flat y-o-y. LFL decreased 1.7%
  • General Merchandise (GM) sales decreased 3.6% y-o-y. LFL decreased 4%
  • Clothing and footwear sales decreased 3% y-o-y. LFL decreased 3.4%
  • Food sales increased 3% y-o-y. LFL increased 0.2%.
  • International sales decreased 1.9% y-o-y.
  • M&S.com sales decreased 4.6% y-o-y at constant rates.

Guidance

  • GM gross margin expected to be higher, between 150 and 200bps.
  • Operating costs expected to be lower - from 4% to 3.5%.
  • Expansion plan for ‘Simply Food’ will be accelerated.
    • M&S expect to open 200 stores over the span of next three years; previously 150 stores.