Marks and Spencer’s (MKS) clothing business set the retailer back once more at the March year-end, with difficulties in transitioning its menswear range through the second half coming on top of availability problems in womenswear during the first. Clothing and home operating profits slumped 37 per cent to £224m, with the division’s operating profit margin squeezed to 7 per cent from 10.1 per cent last year. M&S’s food arm had a stronger year, posting operating profit growth of 11.2 per cent to £237m.
The clothing and home division has sustained the heaviest impact from coronavirus within the group, and M&S is now modelling for a 70 per cent fall in revenues here in the four months to July, with a gradual return to normal levels by February 2021. This will hit annual turnover by around £1.5bn.
M&S has written down £157m of inventories in response to the pandemic, £145m of which sat within its clothing and home arm. The retailer will put aside around £200m worth of its unsold seasonal stock until spring 2021 and carry forward £400m of year-round basic product, which will increase its stock carrying levels. Of the retailer’s £336m in adjustments to statutory profits, £213m related to Covid-19, while £49.2m was linked to the impairment of stores and goodwill.
FactSet consensus estimates forecasts full-year 2021 earnings per share of 4.87p, rising to 11.78p in 2022.
MARKS AND SPENCER (MKS) | ||||
| ORD PRICE: | 86p | MARKET VALUE: | £ 1.68bn | |
| TOUCH: | 86-86.42p | 12-MONTH HIGH: | 262p | LOW: 74p |
| DIVIDEND YIELD: | 4.5% | PE RATIO: | 66 | |
| NET ASSET VALUE: | 190p* | NET DEBT: | 118%** | |
| Year to 28 Mar | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2016 | 10.6 | 489 | 24.9 | 18.7 |
| 2017 | 10.6 | 176 | 7.2 | 18.7 |
| 2018 | 10.7 | 66.8 | 1.6 | 18.7 |
| 2019 | 10.4 | 84.2 | 2.5 | 13.3 |
| 2020 | 10.2 | 67.2 | 1.3 | 3.9 |
| % change | -2 | -20 | -48 | -71 |
| Ex-div: | na | |||
| Payment: | na | |||
| *Includes intangible assets of £399m, or 20p a share **Includes lease liabilities of £2.59bn | ||||
