Marks And Spencer Share Discussion Threads

[countless] 11/10/2018 23:35

Another very busy day with c14m traded and heavily weighted to the buys

[philanderer] 11/10/2018 21:20

'Coast fashion retailer collapses putting 300 jobs at risk'

[the_man_with_the_pink_gun] 11/10/2018 10:12

RUN FOR THE HILLS. THE START OF THE DOWNTURN/CRASH 10/11 IS HERE.

[philanderer] 10/10/2018 20:53

Thanks countless, the last paragraph pretty well sums up my reason for holding these .

[countless] 10/10/2018 18:22

Found this on Stockopedia, which I think is excellent for information, graphs and finding shares, so thought I would share. It was written last trading update by Paul Scott, one of their best contributors I think:-

Share price: 307p (up 5.2% yesterday, on results day)
No. shares: 1,624.8m
Market cap: £4,988m
Results for 52 weeks ended 31 Mar 2018
It would take too long to comment on everything, so here are just some interesting points that I jotted down whilst reading the results.
Revenue up slightly, 0.7%, to £10,622m
Adjusted profit remarkably resilient, at £580.9m - down only 5.4% in a market where much of the competition is seriously struggling.
Adjusted free cashflow is a stand out item, at £582.4m - remember this is after capex, so MKS remains a highly cash generative business.
Huge adjustments though, covering various reorganisational costs, totalling £514.1m - so how you view these results depends on whether you accept the adjustments or not.
Adjusted EPS of 27.8p = PER of 11.0
Net debt is £1.83bn - large, but I think MKS has a substantial freehold property portfolio. I would normally disregard debt that relates to freehold properties
Property - the 2017 Annual Report shows "land & buildings" with a book value of £2,588m at 1 Apr 2017. The word "freehold" is not mentioned anywhere in the Annual Report. I've googled it, and this article from 2013 suggests that 65% of MKS's retail space was freehold. If anyone has more information on what MKS's freehold properties might be worth, then please post it in the comments below.
MKS seems to be permanently reorganising, but the narrative with yesterday's results sounds impressive for its directness - admitting that many things are wrong with the business, but can be fixed.
International profit has more than doubled to £135.2m, due to exiting from loss-making sites/countries, and forex benefits. That's an impressive improvement. I wonder what profit growth might be possible from overseas expansion?
Store closures - this is being accelerated, and will result in 25% of the "legacy" clothing and home space being closed. Whilst brutal, this should considerably boost future profits, I imagine. It also means there will be less competition in many towns for mid-market rivals such as Next (LON:NXT) (my largest long position currently). Store closures will also free up working capital, so cashflow positive. A very interesting comment is made re closures;
We have been encouraged by the proportion of sales transferred to nearby stores from those which have closed.
That is very important. It means that a store closure not only eliminates the losses from the problem store, but it also boosts the profits of its neighbouring MKS store(s). Don't underestimate how positive that will be for profits. I remember in the 1990s, my former employer had 3 shops in Oxford. All of them were loss-making. When our CEO finally disposed of the 2 surplus stores, the 1 remaining store was a goldmine, as many of the customers from the other 2 shops started using the 1 remaining local shop.
Therefore, I think that MKS's store closure programme could significantly boost its profits. Unfortunately though, I think it could also hollow out many town centres, where the presence of an MKS store is a big draw for older, affluent shoppers, who may simply stop going into town altogether, and order online instead?
Dividend - held at 18.7p per share, with a statement saying this will be maintained. More importantly, the cashflows are perfectly adequate to fund this level of payout - a sustainable (I think) 6.1% yield - not bad!
Cost-cutting - MKS has long been seen as a bloated, inefficient company. That is more-or-less confirmed by the refreshingly self-critical commentary alongside these results. The interesting angle on this, is that stripping out excess costs means that MKS should be able to absorb the well known other rising costs affecting all retailers, mainly labour-related. So this is a good reason to believe MKS might be more resilient than most, as it becomes more efficient through the current reorganisation.
Price reductions - don't you just hate the buzz phrase "price investment"! Why not just call it what it is, price cuts. It's not an investment at all. MKS uses an even more elaborate phrase to tell us that it will be reducing some food prices;
Our repositioning will require renewed investment in trusted value. We believe however that this will be offset by cost reduction, volume optimisation opportunities, removing excessive packaging costs, and tackling issues which impact availability and waste.

I like the other stuff, about finding cost savings. This newish management does seem to be on the ball, or getting that way anyway.
Note also that wage cost increases & other inflation-related costs, were "largely offset" by a reduction in the large marketing budget, and through in-store efficiencies. This reinforces my earlier point that MKS is a bloated, inefficient company, but that's a good thing because it means there's an opportunity to make it much better, and hence more profitable. Or at least there's plenty of fat to be cut out, to absorb future cost increases, e.g.
Central costs increased in a number of areas including IT and the introduction of the Government's apprentice levy, however these were offset by reduced costs following the head office restructuring and lower incentive costs year on year.

Cashflow - this was a real eye-opener for me. Due to the huge depreciation charge (on previous years' capex), EBITDA works out at: Adjusted operating profit £670.6m + depreciation & amortisation £580.6 = Adjusted EBITDA £1,251.2m. Wow! The public perception of MKS as an almost failing business, seems to be wildly too pessimistic compared with its figures showing that it's actually still a real cash cow.
Pension fund - is ginormous! It has an IAS surplus of £948.2m. Yet the cashflow statement shows £41.4m was paid into it by the company. So there must be an actuarial deficit.
Scheme assets are £9,989.3m! Scheme liabilities are £9.029.6m, in the accounts. That's some pension scheme.
My opinion - before I looked at these numbers, I just assumed that MKS was a basket case, probably heading towards eventual failure. The figures & narrative paint a very much more positive picture.
Store closures (of loss-making sites) could increase profits considerably over the coming years. New management seem focused on delivering a serious reorganisation of the company. I'm amazed that MKS doesn't seem to do a proper Ecommerce food offering. All I could find was party food that you had to pre-order about 5 days early. How ridiculous! Why doesn't it do a proper groceries delivery service?
Most people seem to agree that MKS clothing is lamentable these days. So that's another potential area for improvement.
With all these problems, that MKS is still generating EBITDA of £1.25bn, says to me that there is a cracking business here, which is partially obscured by all its well-known problems.
I can scarcely believe myself saying this, but based on my review of these figures, I'm minded to go long of MKS shares - for the divis, and the recovery potential, plus the highly cash generative nature of the existing business.

[countless] 10/10/2018 17:59

Today nearly 16m were traded v an average of 7.7m. Something is occuring. Perhaps shorts covering before the next trading update on 7 November? Would be good to learn more about their AI venture with Microsoft.

[countless] 10/10/2018 17:36

Good to see shorts are closing 0.47% down yesterday amounts to some 7.6m shares

[qantas] 10/10/2018 17:17

Shorts doomed to failure and closing.

Please do your own research.

[skyship] 10/10/2018 16:47

DAX dn 2.0%; CAC dn 1.2%; FTSE dn 1.2%; DOW dn 1.4%...….but again M&S (MKS) moving against the trend.

Interesting to look at the recent volumes too.

Might it be possible that someone is stalking?

A brave punt in these markets; but the price action merits further thought...


free stock charts from uk.advfn.com

[philanderer] 10/10/2018 12:28

'Hot summer gives boost to UK economy'

...food and drink production and house building had all performed particularly well during the hot summer months.

[qantas] 05/10/2018 16:01

Shorters doomed to failure.



Please do your own research.

[philanderer] 05/10/2018 14:06

Indeed cw :-)

[capeview] 05/10/2018 13:22

@philanderer, I know you are just posting that link, but there title is such a miss leading headline. Makes out as if they are only targeting those 3 companies and if they seem fit to function but go on to read the article, and it's getting the ideas from 10 companies on how to improve production, environment and running costs.

I really hate these articles and there misleading headlines.

[philanderer] 05/10/2018 12:06

Government begins inquiry into Next, Arcadia and M&S sustainability

[qantas] 04/10/2018 15:20

Christmas stock is arriving in store for a amazing Christmas feast 2018.

Please do your own research.

[debsdowner] 03/10/2018 16:21

Q,

I didn't write the article!

[qantas] 03/10/2018 16:15

debsdowner you are also wrong about Marks and Spencer as they own outright most stores.

Please do do more research.

Please do your own research

[debsdowner] 03/10/2018 16:03

Q

Marks is struggling and pulling down its knickers and offering candy may not be good enough says the New York Times:

[qantas] 02/10/2018 13:46

End of the till? Marks & Spencer launches ‘scan and go’ app that lets customers pay with their mobile

Please do your own research..

[philanderer] 02/10/2018 10:07

Marks & Spencer reveals board changes

[qantas] 29/9/2018 11:00

Holly doing great things for MKS.

Please do your own research.

[philanderer] 27/9/2018 23:59

'Holly Willoughby Effect: Record Sales Force M&S To Restock Her Fashion Edit'