M&S half year results


M&S revenue fell 15.8% in the 6 months to 26 September but was less severe than the grocer's estimate of 22.8% and was in line with consensus forecast.  


Food LFL was up 2.7%, helped by bigger basket size but held back by 'food on the go'. The M&S exposure to this sector has meant it benefited less than many of the other major UK grocers from the pandemic. Simply Food outlets on rail, air and roadside locations have suffered from travel restrictions, with sales falling 75%. With a second lockdown commencing and government advice to work from home, the sector is likely to continue to suffer. 


Food adjusted operating profit increased 19% whilst Ocado retail revenue was up 47.9% giving M&S £38.8m half year profits from the JV.  M&S confirmed that revenue growth at Ocado is limited by the capacity of the existing CFC network. Ocado is usually close to maximum capacity in the lead up to Christmas and therefore with an elevated base, material growth in revenue is not expected despite a second lockdown. A substantial increase in capacity is not expected until Autumn 2021.  Covid continues to highlight the importance of the M&S store estate improvement programme - "Modern retail park stores with good parking outperformed but the business has been held back by the legacy estate.