Marks and Spencer Group’s Q4 2015/16: Food sales continue to outperform the market

LONDON, 2016-Apr-07 — /EPR Retail News/ —

Marks and Spencer Group Plc

Quarter 4 2015/16 Trading Statement

13 Weeks to 26 March 2016  

 ‘Another good quarter in Food; more to do in Clothing and Home’

Food sales continue to outperform the market

  • Sales +4.0%; LFL +0.0%; grew market share to 4.3%
  • New store opening programme performing ahead of expectation

Significant increase in Clothing and Home gross margin

  • Gross margin now expected to be between +240 to +250bps
  • Continued improvement in buying margin and some investment in price

Some progress in Clothing and Home sales but more to do

  • Sales -1.9%; LFL -2.7%; reduced proportion of sales on promotional discount
  • M&S.com sales +8.2%; further improvement in customer satisfaction

Strong cash generation 

  • Continued tight management of costs and cash
  • £150m share buyback programme completed

Steve Rowe, Chief Executive, said:

“I am very proud and privileged to be leading M&S.  We are focused on getting even closer to our customers and putting them at the heart of everything we do.

“We had a mixed performance in the final quarter of the year. Our Food business once again outperformed the market by c.3.5% pts.   Although the sales decline in Clothing and Home was lower than last quarter, our performance remains unsatisfactory and there is still more we need to do.

“Turning around our Clothing and Home business by improving our customer offer is our number one priority.  I will update you on my thoughts on the business in May.”

Trading summary

Overall, group sales were +1.9% for the quarter.

The Food business continued to outperform a highly competitive market. In line with our strategy, our store opening programme continues to drive strong sales growth. We opened 80 new stores in the year and as a result we grew our market share to 4.3%. Customers turn to us for special occasions and this quarter was no exception with our biggest ever Mothers’ Day. We continued to invest in our special and different products launching 400 new lines whilst also offering great value for our customers.

In Clothing and Home, we faced a challenging backdrop characterised by price deflation and a flat market. Spring/Summer season launched with significantly higher product availability than last year. We continued to make improvements across range and design, for example, our Autograph sales were up 10%. We also began to reduce the proportion of sales on promotional discount and will continue to do so as we head into the new financial year. However as flagged at quarter three, we had more stock into sale. At the same time, we invested in sharpening our prices on a number of lines, whilst delivering a strong gross margin improvement. Although these actions contributed to the sales run rate improving since the last quarter, we still have a number of areas to address.

M&S.com delivered a good performance with strong improvement in customer satisfaction scores driven by improved website speed and ease of navigation. We ran fewer online only promotions giving customers a more consistent shopping experience across our channels.

Despite improved sales in both our franchise and owned businesses in International, the previously guided currency pressure and challenging trading conditions are still expected to heavily impact the full year profitability.

Fourth quarter sales 13 weeks to
26 March 2016
Group sales1 +1.9%
Food2
–          Like-for-like
+4.0%
+0.0%
Clothing and Home2
–          Like-for-like
 -1.9%
-2.7%
M&S.com sales3 +8.2%
Total UK sales
–          Like-for-like
+1.6%
-1.1%
International sales1 +3.8%

1Stated on ex-VAT and constant currency basis. International sales at actual currency were +4.3% and Group sales were +1.9%. 2Timing of Easter contributed 1.0% to Food and 0.4% to Clothing and Home sales. 3Memo only.

Outlook

We now expect the full year Clothing and Home gross margin to be between +240 to +250bps.  All other trading guidance remains unchanged.

Marks and Spencer Group plc will report its full year results for the 53 weeks ended 2 April 2016 on 25 May 2016.  All of the above guidance is stated on a 52 week basis.

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 such forward-looking statements are subject to various risks and uncertainties, including 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, please contact: 

Investor Relations:

Majda Rainer+44 (0)20 8718 1563
Helen Cox+44 (0)20 8718 8491

Corporate Press Office:+44 (0)20 8718 1919
Out of hours calls:+44 (0)20 8718 2000

Investors & Analysts Conference Call:
The call will be hosted by Steve Rowe and Helen Weir at 8.30am on Thursday 7 April 2016:
Dial in number: +44 (0)20 3427 1907
Access Code: 4274999

A recording of this call will be available until 17 April 2016:

Dial in number: +44 (0)20 3427 0598

– Ends –

Marks and Spencer Group CEO Marc Bollandt to retire in 2016; Steve Rowe to succeed

LONDON, 2016-1-11 — /EPR Retail News/ — Marks and Spencer Group plc today announces that Marc Bolland has informed the Board that, after six years in the role, he wishes to retire as CEO in 2016.

Marc will be succeeded as CEO by Steve Rowe, Executive Director of General Merchandise. Marc Bolland will remain CEO and on the Board until the end of the current financial year on 2 April 2016 when he will hand over to Steve Rowe. Marc will then remain available to Steve and the Board to assist in the transition until 30 June 2016.

In reaching its conclusion to appoint Steve Rowe as the next CEO of Marks and Spencer Group plc, the Nominations Committee set a rigorous assessment, development and selection process, including external benchmarking. The Board is grateful to Marc for his planning, enabling the Nominations Committee to work carefully and systematically on his succession.

Steve Rowe has been with Marks and Spencer Group plc for over 25 years and been a Board Member since 2012. Before joining the Board, Steve worked in a range of senior positions across the business including Director of Retail and E-commerce and various positions in General Merchandise. In 2012 he was appointed by Marc Bolland to the Executive team as Executive Director, Food and was appointed to the Board of Marks and Spencer Group plc. In particularly difficult market conditions Steve led the Food business to produce 12 consecutive quarters of like for like growth, grow its margin and all its key performance metrics, continue its record of outstanding innovation and set out a path for further profitable growth. In July 2015, Steve Rowe was appointed Executive Director, General Merchandise with a mandate to improve the overall performance of that business, building on the improved design and sourcing capabilities.

Robert Swannell, Marks and Spencer Group plc Chairman, said “Over the last six years Marc Bolland has led Marks & Spencer through a period of necessary change. Over this time, the company has made significant investment in enhanced infrastructure and capabilities.

“It is now positioned for a digital age, with its own on-line platform and dedicated e-commerce distribution centre, improved design and sourcing capabilities in General Merchandise and an industry-leading track record of growth and innovation in the Food business.  Marc has put Plan A at the heart of the business and leaves a strong sustainability legacy. The Board is very grateful to Marc for his leadership in this important period of enhancing Marks & Spencer’s competitive position for its future.

“I am delighted that, after the most rigorous succession planning, Marc will be succeeded by Steve Rowe. Steve has a deep knowledge of Marks & Spencer and a proven track record of delivering results in key parts of the business. The Nomination Committee was unanimous in supporting Steve’s appointment in the light of his considerable knowledge of the business and its people, his appetite to continue the process of change, particularly in General Merchandise, his perceptive and effective problem solving, his values and his observed leadership.“

Marc Bolland said “It has been a huge honour to lead one of Britain’s most iconic companies. I am delighted to handover to Steve Rowe as my successor. I have worked closely with Steve for six years and I am convinced that he will be a great leader for Marks & Spencer. I would like to thank all my colleagues and the Board at Marks & Spencer for being so supportive of the drive to prepare M&S for the future. I am proud to leave such a large group of talent behind in the business.”

Steve Rowe said, “It is a great privilege to be appointed CEO of Marks & Spencer and to have the opportunity to lead this unique company and all its people forward.”

Notes to Editors:

Media Conference Call:
This will be hosted by Marc Bolland, Chief Executive Officer at 07.10 on 7th January 2016:
Dial in number: +44 (0) 203 427 1909 Confirmation code: 4047703

A recording of this call will be available until 17th January 2016:
Dial in number: +44 (0)20 3427 0598 Pass code: 4047703

Remuneration:

Steve Rowe:

From 2 April 2016, Steve Rowe will receive a salary of £810,000 on his appointment as Chief Executive Officer. The overall variable incentive opportunity for the Chief Executive role will remain unchanged. All other terms of Steve Rowe’s existing service agreement, including pension allowance, will remain unchanged.

Marc Bolland:

  • The following information is provided in accordance with section 430(2B) of the Companies Act 2006:
  • Marc Bolland’s remuneration terms will be in line with his service agreement and the key provisions for contract termination as per Marks and Spencer Group plc’s Executive Remuneration Policy approved by shareholders in 2014.
  • In line with Marc Bolland’s service agreement, Marc Bolland will receive salary, benefits and pension benefits by way of phased monthly payments (subject to mitigation) up to the end of the notice period of 7 January 2017.
  • Marc Bolland will remain eligible for consideration for payment of an annual bonus for 2015/16, subject to performance.
  • Marc Bolland will not be eligible to participate in the Annual Bonus or Performance Share Plan awards for 2016/17.
  • Any unvested nil-cost options awarded to Marc Bolland under the Deferred Share Bonus Plan will vest in full on termination and may then be exercised in accordance with the Plan rules.
  • Any unvested nil-cost options awarded under the Performance Share Plan will be time pro-rated and will vest, subject to performance conditions on a wait and see basis at the normal vesting date and may then be exercised in accordance with the Plan rules.

Further details of the operation of the Deferred Share Award and Performance Share Plan are set out in the Directors’ Remuneration Report in our Annual Report and Financial Statements 2015. Full disclosure of these remuneration arrangements will be provided in our Directors’ Remuneration Report in 2016.

For further information, please contact:

Investor Relations:
Majda Rainer:+44 (0)20 8718 1563
Helen Cox: +44 (0)20 8718 8491

Media enquiries:
Corporate Press Office:+44 (0)20 8718 1919

– Ends –

Richard Solomons appointed to Marks and Spencer Group’s Board as Non-Executive Director

LONDON, 2015-4-13 — /EPR Retail News/ —  Marks and Spencer Group plc (“M&S”) today announces the appointment of Richard Solomons to its Board as a Non-Executive Director. He will take up his appointment on 13 April 2015 and will also join the Nomination Committee at that time.

Richard is currently Chief Executive Officer of InterContinental Hotels Group (IHG). Richard joined IHG (and its predecessor and affiliated companies) in 1992 and worked in a number of senior roles, including operational, across the business until his appointment to the Board of IHG as Chief Financial Officer in 2003. He was appointed CEO in July 2011.  Richard will bring strong commercial, financial, consumer, branding and global experience to the M&S Board.

Commenting on the appointment, Robert Swannell, Chairman of Marks & Spencer said: “We are delighted to welcome Richard Solomons to the Board of M&S. He is a CEO with a proven track record in a global consumer business and will bring a wealth of relevant experience.”

Richard Solomons said: “I am looking forward to joining the Board of M&S and contributing to the continuing development of this iconic, innovative and trusted brand.”

– Ends –

For more information, please call:

M&S Corporate PR    0208 718 1919
Notes to Editors:

  • Richard has been Chief Executive Officer of IHG since July 2011. IHG is a global organisation with a broad portfolio of brands including InterContinental® Hotels & Resorts, Holiday Inn® Hotels & Resorts and Crowne Plaza® Hotels & Resorts. IHG franchises, leases, manages or owns over 4,800 hotels and more than 710,000 guest rooms in nearly 100 countries. Over 350,000 people work across IHG’s hotels and corporate offices worldwide.
  • Richard has led the continued growth of IHG, including the launch of the company’s two newest brands, HUALUXE Hotels and Resorts, the first international hotel brand tailored for the domestic Chinese customer and EVEN Hotels, the first mainstream wellness hotel brand. He has also overseen the re-launch of IHG’s loyalty scheme as IHG Rewards Club, the world’s first and largest hotel loyalty programme with over 82 million members worldwide.
  • Prior to his appointment as CEO, Richard served as Chief Financial Officer and Head of Commercial Development at IHG. He was integral in shaping and implementing IHG’s asset-light strategy, which has helped the business grow significantly since it was formed in 2003 as well as supporting the return of £10.4 billion to shareholders. He was also responsible for the Group’s financial affairs and investor relations. In 2008, he served as Interim President of IHG’s Americas business.
  • Richard first joined Bass PLC (later Six Continents PLC), the company from which IHG emerged, in June 1992. He subsequently held a number of senior roles in the business including Chief Operating Officer of the Americas Hotels division, before being appointed Finance Director of the company in March 2003. In this role he oversaw the separation of IHG from Six Continents later in 2003 and then the disposal of its 100% holding in the soft drinks business, Britvic plc in late 2005.
  • Prior to joining IHG Richard worked in Investment banking for seven years with Hill Samuel Bank, based in New York and London.
  • Richard is a member of the Executive Committee of the World Travel and Tourism Council, a member of the Industry Real Estate Financing Authority Advisory Council and a Governor of the Aviation and Travel Industry Group of the World Economic Forum.

MEDIA CONTACTS

 

Marks and Spencer Group Q3 update: Food business delivered another excellent quarter, significantly outperforming the market by c.3% pts

‘Very good Christmas in Food, difficult quarter in GM’

LONDON, 2015-1-8 — /EPR Retail News/ — Marks & Spencer made good progress in three of its four key priorities for the year:

1) Food growth

  • Great quarter with strong outperformance of the market: sales +2.8%; +0.1% LFL
  • Record sales, +17% in the key Christmas week
  • New stores performing well and store opening programme on track

2) Womenswear performance

  • Difficult quarter for General Merchandise: sales -5.4%, LFL -5.8%
  • Clothing sector performance impacted by unseasonal conditions in October and November
  • Disruption at our Castle Donington distribution centre affected performance in December

3) General Merchandise gross margin improvement

  • Good progress on gross margin: guidance unchanged at +150 to +200bps
  • Slightly lower discounting driven by December

4) Cash generation

  • Improved operating costs performance: guidance improved from c.+3.5% to c.+2.0%
  • Continued tight control of costs and capital expenditure

Marc Bolland, Chief Executive, said:

“M&S had a very good Christmas in Food. We delivered record Christmas sales, strongly outperforming the market. We had a difficult quarter in General Merchandise, dominated by unseasonal conditions and an unsatisfactory performance in our e-commerce distribution centre. We maintained our focus on General Merchandise gross margin, with guidance unchanged.

“I’d like to thank all of our colleagues for their exceptional hard work and commitment over the key Christmas period.”

Trading summary

Our Food business delivered another excellent quarter, significantly outperforming the market by c.3% pts. We saw record sales over the festive period, up 17% in the key Christmas week. Customers once again turned to us for our highly differentiated food offer, combining the best of quality, seasonal speciality and convenience, all at competitive prices. We launched nearly 750 new products giving customers more choice than ever, with record results in turkeys, party food, desserts and deli.

Our new website performed well operationally, even through periods of peak demand. Customer metrics including customer satisfaction and conversion continued to improve, resulting in positive sales growth through October and November.

However, disruption at our distribution centre in Castle Donington strongly impacted .com and in turn, GM performance in December. We have already made progress in addressing this and have now returned to our improved delivery proposition.

In General Merchandise, we received positive customer feedback on our Autumn/Winter Womenswear ranges. However, trading in October and November was affected by unseasonal conditions which impacted sales across the clothing sector and resulted in a highly promotional market. We deliberately held back the level of discounting especially in December. While this had an adverse impact on sales we delivered a good performance on gross margin.

Overall International business was heavily impacted by the worsening currency and macro-economic issues across our Middle East and Russia franchise region. However, our owned business performed well with strong performance in key markets such as India.

 

Third quarter sales

13 weeks to

27 December 2014

Food

–          Like-for-like

+2.8%

+0.1%

General Merchandise1

–          Like-for-like

 -5.4%

-5.8%

M&S.com sales2 -5.9%
Total UK sales

–          Like-for-like

-1.1%

-2.7%

International sales3 -5.8%
Group sales3 -1.6%

1 Clothing sales were -4.9%, LFL -5.3%

2 Memo only

3  Stated on ex-VAT and constant currency basis. International sales at actual currency were -8.8% and Group sales were -1.9%.

Outlook

Gross margin guidance remains unchanged at +150bps to +200bps for General Merchandise and +10bps to +30bps for Food. As a result of tight control of costs as well as lower volume growth, we have improved our operating cost guidance from c.+3.5% to c.+2.0%.

All other guidance remains unchanged.

Marks and Spencer Group plc will report its fourth quarter trading results on 2 April 2015.

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 such forward-looking statements are subject to various risks and uncertainties, including 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, please contact: 

Investor Relations:

Majda Rainer +44 (0)20 8718 1563
Helen Cox +44 (0)20 8718 8491

Corporate Press Office:+44 (0)20 8718 1919
Out of hours calls:+44 (0)20 8718 2000

Investors & Analysts Conference Call:
This will be hosted by Marc Bolland at 9am on Thursday 8 January 2015:

Dial in number: +44 (0)20 3427 1905
Access Code: 2395581

A recording of this call will be available until 18 January 2015:

Dial in number: +44 (0)20 3427 0598
Access Code: 2395581