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Marks & Spencer Group PLC MKS

Morningstar Rating
GBX 265.10 −0.80 (0.30%)
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Company Report

Ocado Retail: Positive Momentum Continues in First Quarter With Key Indicators on the Rise

Ocado Retail, a joint venture between Ocado Group and Marks & Spencer, reported a first-quarter trading update for the 13 weeks to March 3, 2024, with retail revenue up 10.6%, including volume growth up 8.1% and the average sales price, or ASP, up 2.2%. The ASP was lower than market inflation, reflecting the online grocer's efforts toward value perception. Ocado Retail's good performance was driven by: 1) customer growth of 6.4% to 1,018,000, 2) growth in average orders per week of 8.4% to 414,000, and 3) the average basket value increased by 2.1%—in turn due to the higher ASP (lower than inflation) with a slightly lower basket size at 45 items per order (down 0.2%). The company maintained 2024 guidance: it expects Ocado Retail to grow at a high-single-digit rate versus 8% in our model and EBITDA margin to be around 2.5%.

Price vs Fair Value

MKS is trading at a 10% premium.
Price
GBX 254.10
Fair Value
GBX 269.00
Uncertainty
High
1-Star Price
GBX 748.80
5-Star Price
GBX 677.00
Economic Moat
Cxpn
Capital Allocation
Kgrhswsy

Bulls Say, Bears Say

Bulls

Its joint venture with Ocado presents an opportunity for M&S to expand efficiently in one of the fastest growing channels in the U.K. grocery market and extend its product range beyond fresh and prepared meals.

Bears

M&S in in need of a radical and urgent business model reset, which will take time to complete.

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News

Trading Information

Previous Close Price
GBX 265.90
Day Range
GBX 264.00267.50
52-Week Range
GBX 154.30293.20
Bid/Ask
GBX 0.00 / GBX 0.00
Market Cap
GBX 538.33 Bil
Volume/Avg
8.9 Mil / 13.0 Mil

Key Statistics

Price/Earnings (Normalized)
13.98
Price/Sales
0.45
Dividend Yield (Trailing)
0.38%
Dividend Yield (Forward)
0.38%
Total Yield
0.38%

Company Profile

M&S is a British multichannel retailer with stores across Europe, Asia, and the Middle East. The company sells into more than 60 countries from thousands of stores and several websites around the world and offers predominantly own-brand luxury food, clothing, and home products with the majority of sales coming from its U.K. operations. Marks & Spencer operates three business models—owned, franchise, and joint venture—in the U.K. and internationally. The online business globally is delivered through localized owned and franchised websites and partnerships. The food segment includes value products, convenient ready-made meals, and healthy items. The clothing and home division sells own-brand and high-quality womenswear, lingerie, menswear, kidswear, beauty, and home products.
Sector
Consumer Cyclical
Industry
Department Stores
Stock Style Box
Mid Core
Total Number of Employees
66,371

Competitors

Valuation

Metric
MKS
TSCO
SBRY
Price/Earnings (Normalized)
13.9812.1112.42
Price/Book Value
1.841.760.89
Price/Sales
0.450.320.20
Price/Cash Flow
6.063.74
Price/Earnings
MKS
TSCO
SBRY

Financial Strength

Metric
MKS
TSCO
SBRY
Quick Ratio
0.430.570.52
Current Ratio
0.800.740.72
Interest Coverage
3.161.47
Quick Ratio
MKS
TSCO
SBRY

Profitability

Metric
MKS
TSCO
SBRY
Return on Assets (Normalized)
3.67%1.96%
Return on Equity (Normalized)
13.64%6.95%
Return on Invested Capital (Normalized)
7.70%4.94%
Return on Assets
MKS
TSCO
SBRY
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