Marks and Spencer 2012 Annual Report Download - page 37

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Marks and Spencer Group plc Annual report and financial statements 2012 35
Overview Strategic review Financial review Governance Financial statements and other information
Financial review
Summary of results
52 weeks ended
31 March
2012
£m
2 April
2011
£m
%
variance
Group revenue 9,934.3 9,740.3 +2.0
UK 8,868.2 8,733.0 +1.5
International 1,066.1 1,007.3 +5.8
Underlying operating profit 810.0 824.9 -1.8
UK 676.6 677.9 -0.2
International 133.4 147.0 -9.3
Underlying profit before tax 705.9 714.3 -1.2
Non-underlying items (47.9) 66.3 -
Profit before tax 658.0 780.6 -15.7
Underlying earnings per share 34.9p 34.8p +0.3
Basic earnings per share 32.5p 38.8p -16.2
Dividend per share (declared) 17.0p 17.0p level
Revenues
Group revenues were up 2.0% driven by strong performances
in our Food and International businesses. Revenue growth by
area, as reported by period was:
Total revenue % Q1 Q2 Q3 Q4 FY
UK
Clothing 0.9 -1.1 1.1 -0.3 0.2
Home -5.4 -9.2 -13.3 -7.5 -10.0
General Merchandise 0.3 -1.9 -0.8 -1.2 -0.9
Food 5.0 2.8 4.5 3.1 3.9
Total UK 2.7 0.5 1.8 1.2 1.5
International 7.8 10.1 8.1 -2.0 5.8
Total Group 3.2 1.5 2.4 0.8 2.0
Like-for-like revenue % Q1 Q2 Q3 Q4 FY
UK
General Merchandise 0.0 -2.5 -1.8 -2.8 -1.8
Food 3.3 1.0 3.0 1.0 2.1
Total UK 1.7 -0.7 0.5 -0.7 0.3
UK revenues were up 1.5% in total with a like-for-like increase
of 0.3%. We added 2.1% of space, 1.8% in General
Merchandise and 2.6% in Food, on a weighted average basis.
International revenues were up 5.8%. Our owned businesses in
India and China saw strong growth, driven by good like-for-like
growth and the opening of new space. Trading conditions
continue to be difficult in Greece and the Republic of Ireland.
Our franchise business continued to perform well, with the Far
East and Middle East regions growing strongly. We returned to
France in November, opening our first store in Paris at 100
Avenue des Champs Élysées, with more stores planned.
Operating profit
Underlying operating profit was £810.0m, down 1.8%.
In the UK, underlying operating profit was down 0.2% at
£676.6m. Gross margin was down 30 basis points at 40.8%.
General Merchandise gross margin was down 80 basis
points at 51.4% as a result of raw material and wage inflation,
adverse currency pressure and the increase in promotional
activity. Food gross margin was up 50 basis points at 31.4%
with better management of promotions and waste, as well as
early benefits from new systems implementation, helping to
offset the commodity price increases.
Underlying UK operating costs were up 1.5% to £2,995.0m.
A breakdown of the costs is shown below:
52 weeks ended
31 March
2012
£m
2 April
2011
£m
%
variance
Retail staffing 889.2 877.6 +1.3
Retail occupancy 1,030.9 1,011.8 +1.9
Distribution 398.1 393.5 +1.2
Marketing and related 161.8 142.9 +13.2
Support 515.0 525.5 -2.0
Total 2,995.0 2,951.3 +1.5
Retail staffing costs were well managed despite increases in
selling space and the annual pay review.
Increased occupancy costs reflect growth in selling space
and the impact of rent and rates reviews, offset by service
charge negotiations and reduced energy consumption.
Distribution costs continue to be very well managed despite
inflationary pressure and volume increases in Food and
Multi-channel, as we continued to see the benefits of
initiatives to improve supply chain efficiency.
The growth in marketing costs was weighted towards the first
half of the year as we increased the number of advertising
campaigns to support the launch of the ‘Only at Your M&S’
branding as well as the relaunch of our clothing sub-brands.
The reduction in support costs reflects a higher depreciation
charge associated with our IT investment, more than offset by
efficiency savings and improved procurement.
The underlying UK operating profit includes a contribution from
the Group’s continuing economic interest in M&S Money of
£50.7m. This contribution is up 44% (last year £35.2m), due to
a significant reduction in delinquency rates within M&S Money
as customers have been paying down outstanding balances.