The general retailer Marks & Spencer Group Plc reported its full year financial results for the period ended March 31, 2019. During the reported period, the group’s revenue declined by 3.0% to £10,377.3 mn from £10,698.2 mn in the last financial year.
Its food business revenue declined by 2.3% on a like-for-like basis and made an adjustment of 1.5% for Easter. Revenue from Clothing & Home business reduced by 3.6% which was largely impacted by the store closure. However, gross margin from clothing & home business improved by 20bps on account of 14% lower stock available for sale.
Pre-tax profit (before adjusting items) was lowered by 9.9% to £523.2 mn against £580.9 mn in the corresponding previous year. This was mainly due to a 2.3% decline in the UK gross profit and to a certain extent counterbalanced by the lower operating costs during the year.
Source: Company filings, LSE
Basic earnings per share surged to 2.1 pence and recorded a surge of 31.3%, mainly due to the impact of the lower adjusting items on a year-on-year basis. Although, adjusted earnings per share for the period stood at 25.4 pence and recorded a decline of 8.6% against the previous year, primarily on account of lower adjusted profit on a YoY basis.
Free cash flow before adjusting items increased to £729.4 mn against £582.4 mn in the year-ago and recorded a growth of 25.2 per cent. Capital expenditure during the FY19 period lowered by £60.8 mn to £234.9 mn against £295.7 mn in FY18.
Net Debt reduced by 15.3% to £1.55bn, mainly because of working capital flow and the stringent capital expenditure.
Their food brand remains very strong, and the proposed joint venture with the Ocado Plc would help them to increase their grocery market share in the medium term substantially. Transformational JV with Ocado Plc would unlock profitable growth for Marks & Spencer’s food business.
Share Price Performance
1Yr- Daily Price Chart (as on May 24, 2019), after the market closed. Source: Thomson Reuters
On May 24, 2019, shares of MKS closed at GBX 246.3 and added 3.2 points or 1.32% against the previous day closing price. In the last one year, shares of the MKS have registered a 52w high of GBX 316.6, and a 52w low of GBX 237.50 and at the current market price, as quoted in the stock price, shares were trading considerably below the 52w high price level (-22.20%).
From the simple moving average standpoint (SMA), shares were trading below the 30-days, 60-days and 200-days simple moving average price.
The company has an outstanding market capitalisation of around £3.98 bn, and at the current market price, the dividend yield of the stock stood at 5.64%, which is above the dividend yield of the FTSE 100 index.