Good morning, everybody. It's Archie here, and I'm just going to say a few words before Steve Rowe introduces our results presentation. Eoin Tonge, our still new-ish Finance Director, will go through the detail, and then Steve is going to talk about our Never the Same Again program for the future. Obviously, this has been a year like no other, and frankly, our results look pretty unrecognizable from last year, and hopefully they'll look unrecognizable from next year, too. For that reason, we provide a little more detail on the performance, the dynamics of categories and stores, so you can understand how the business is trading. It's not really this year's results that I'm spending my time worrying about. I've no doubt that our teams in the stores and the trading teams will serve customers well and deliver for Christmas, and do a great job.
We already have a high-performing food business, which is showing great further progress. I've no doubt, either, that we'll come out of the year with probably significantly better liquidity than we originally thought we would, and we set out amongst our scenarios. That's not really the test. The test is whether we use the COVID crisis to reshape the business, to make decisions faster, and to emerge like a coil spring for the future. That's why we launched the Never the Same Again program, NTSA, which Steve is going to talk about. What does this mean? It means that decisions that were previously marginal, we might have hesitated over, are no longer marginal. It means that decisions that might have required a consensus of the management team, M&S was always a consensus-led business, no longer require that consensus. We're just going to make it happen.
It means that adequate performance is no longer adequate. We can all see that, because now we have to change for the future, and the economic pressures of COVID have forced us to make decisions that we might have otherwise hesitated over. I'll just give you some examples. It's true, you've all seen this year that we've sadly had to part company with a lot of colleagues, 7,000 or 8,000 colleagues in the business, many of them longstanding, many of them good friends. It's been a painful process. It's more than just reducing the workforce to reflect lower demand. It's about the new technology we've got in the stores. Using the new technology to work more flexibly, faster, more productively than ever before.
I really think we're going to come out of this with a better, more motivated, driven, more flexible workforce than M&S has ever had. MS2. We've had a reasonably performing online business, but behind some of the competition. MS2 is about inverting it, making us an online-led business with retail in support and hopefully in synchronicity with online. It really is a substantial change, and hopefully a change in pace. Ocado. We all know when we did the Ocado deal originally, there was widespread skepticism, including amongst many of our shareholders. Some of them weren't really believers in the Ocado model. Now we've launched it very successfully. It's going well. The synergies are coming through, and it looks like an obvious decision for the future. The supply chain in Clothing & Home in particular, but also in Food.
Supply chain's never been exactly a strong point for M&S, if anything, a blind spot. Under Richard Price's leadership in Clothing & Home with Paul Babbs here, we're really going to reshape the supply chain radically for the future. Finally, shape of buy in Clothing & Home, this almost impossibly wide range that we used to be buying. We've made good progress on that. I actually think if it weren't for COVID, that would be really apparent in our trading performance. With Richard Price arriving and with the excellent leadership of Jill Stanton, Wes Taylor, Laura, and Heidi in the businesses, we're going to see dramatic progress. These are the things now under a stronger than ever executive team that give me confidence about the future of M&S.
To believe in our future, you really have to believe that these programs are going to make a difference and catapult us into the future. That, to me, is the real importance of this presentation, and that is what Steve's going to talk about when we've gone through the results in a moment. Steve, over to you.
Thanks, Archie. Good morning and welcome to the M&S half-year results presentation. I hope you and your families are safe and well. If you're watching the presentation on Wednesday the 4th of November, there will be a Q&A session at 9:30 A.M. for analysts and investors. The details can be found in this morning's release. This morning's presentation has two parts to it. Eoin Tonge, our new CFO, will take you through the results for the half year and our financial priorities going forward. I will then talk about how we're accelerating our transformation through the Never the Same Again program. The results this morning cover exactly six months since the U.K.-wide lockdown. In the first quarter, over half our clothing business was closed. We've faced extraordinary challenges in the period, and our colleagues and customers have too.
Those challenges will continue with the national lockdown in Wales nearing its end and the lockdown in England about to begin. Unprecedented is a word almost certainly bandied about too much at the moment, but it is the only way to describe the impact of COVID. Our robust performance is on the back of a remarkable effort by my colleagues, who continue to move heaven and earth to support each other, help the vulnerable, and deliver for our customers. I'm incredibly proud of them, and they have my heartfelt thanks. The work we have done over the past few years to modernize our food business and broaden its appeal has stood us in good stead during the crisis. Despite headwinds from the shape of store estate and associated categories, this work, coupled with the strong execution, has delivered like-for-like growth in food.
Our transformational investment in Ocado Retail has delivered an exceptional contribution to the bottom line with strong growth and margin improvement. With stores closed, there's been a heavy impact from the crisis on Clothing & Home. Performance is improving, and the actions I outlined in May have enabled us to exit the period with a much stronger stock position than expected. M&S. com is in strong growth and is gaining market share of the online market, as more customers shop M&S.com for the first time, supported by our investment in logistics and the relaunch of Sparks. Critically, these actions mean we are underpinned by a strong cash position. Net debt has been reduced, and we have combined cash and undrawn facilities of GBP 1.4 billion.
As well as delivering a robust performance in the face of the pandemic, we have made progress in embedding the faster, leaner, and more digitally minded ways of working that we adopted in the early days of the crisis. The actions we have taken as part of our Never the Same Again program are beginning to accelerate the transformation and set us up to win in a post-COVID world. In September, we successfully launched M&S Food on Ocado. This was a huge operational undertaking, executed brilliantly by the Food and Ocado teams. Importantly, the year one synergy benefits we expected at the time of the investment are on track. Over the past few years, you've heard me talk about the importance of technology and digital to changing the way we operate across the business.
Our market leading partnership with Microsoft enabled more flexible working through the pandemic, and many of these changes have been made permanent through the restructuring announced in August. We've stripped out management layers in our support center to reduce central costs, and we've streamlined our store operations and made them more productive. In our online business, while we are pleased to report strong growth and market share gains, we have been clear that we need to go further in a market increasingly driven by pure play retailers. That's why I'm building on the investments we have made in the past few years in data, digital, and online capability to create a single team focused on step-changing online growth called MS2. I will talk to you more about progress on our Never the Same Again priority shortly, but now Eoin will give you more financial detail on our performance.
Thanks, Steve. Good morning to everyone. I'm delighted to be here to present my first set of results as CFO. Obviously, as both Archie and Steve have said, this has truly been an unprecedented time for the world and indeed for our business. When I joined in early June, most of our Clothing & Home store business was closed due to the lockdown. An extraordinary situation when we think about it. Although the business has recovered well since those days, it is obviously clear the world is still not near to approaching normality. The results in the half year period were, of course, materially impacted, with group sales down nearly 16% and the group recording an adjusted loss before tax as a result.
There was a lot going on in the period, and as you will see in the results release, there were a number of significant gains and losses relating to COVID within the adjusted results. In the second quarter, the business recovered from lockdown, albeit with a much-changed category and channel mix. The performance on cash was strong, and critically, we generated cash and actually reduced debt over the period, when at one stage our scenario had predicted it could materially increase. This sets us up well for further disruption, which we now of course expect. Although the crisis has been challenging for the business, I believe we have coped and are coping well. More importantly, I truly believe it provides us with a once in a lifetime opportunity to reset the business and recover more strongly when we emerge, which Steve will talk more about later.
I will now take you through the results in a little more detail. I'll start with our food performance. Sales were broadly level overall, but that doesn't tell the full story. The food business also faced a number of headwinds, most notably the closure of its hospitality business for a large part of the period, and also its exposure to travel and office locations and the related high dependence on convenience and food to go. Therefore, the like-for-like performance, excluding hospitality, demonstrates a strong underlying performance and one you can see was consistently delivered across the period. Underlying sales were driven by increased basket size as we saw shoppers complete more of their weekly shop with M&S in line with our strategy. Operating profit increased 19% and margin was therefore up on the year as a result. There was a lot going on here.
Firstly, we saw an adverse gross margin mix impact of about 140 basis points driven by the lower hospitality and convenience sales. This was more than offset by lower costs, including more efficient staffing and marketing costs, and indeed, the benefit of business rates relief. Turning now to the contribution from Ocado Retail. Steve will talk more about the momentous changeover to M&S supply we executed on September 1st. Our return from Ocado Retail itself was strong in the period. As already reported by Ocado Group, revenue performed strongly for the six months to August, with the increase reflecting the strong channel shift to online grocery in the period. Growth and demand remained strong in the second quarter, despite order size beginning to normalize from COVID-related peaks. The exceptional items line in the table relates to the ongoing insurance receipts regarding the business interruption due to the Andover fire.
Overall, Ocado Retail generated a substantial contribution to group results, driven by this top-line growth, as well as excellent CFC and delivery efficiencies. If there was a lot going on in food, there was of course even more going on in Clothing & Home. Firstly, as I've mentioned, the revenue decline reflects the effects of lockdown in Q1 on store sales and a gradual improvement in Q2, although trade remains constrained by the weighting of sales towards formal categories and city-center and high street stores.
Online sales performed strongly, particularly in the second quarter, supported by strong demand for casual categories, kidswear and home, and lower returns rates. Encouragingly, we grew online market share towards the end of the period. Overall, Clothing & Home had an operating loss of GBP 108 million. At a headline view, while online profitability increased sharply, this was insufficient to offset the decline in store sales.
Looking at it in slightly more detail, you will of course see that gross profit was down significantly as a result of the reduced sales, with the margin rate reflecting strong progress made in Q2 clearing surplus stock and the consequent higher weighting of discounted sales. As I will outline later, better than expected sell-through of seasonal stock has resulted in a reduced inventory position at half year, which is reported as a credit to adjusting items. Operating costs reduced in all areas with effective management and staff costs supported by the furlough scheme, good cost control elsewhere, and indeed, the benefits of business rates relief. Lower distribution costs to store were largely offset by higher fulfillment costs online to service growth, although some of this was recovered in higher delivery income.
Taking that in the round for the group, as discussed, strong growth in food and the contribution from Ocado Retail was more than offset by the decline in Clothing & Home. Let me take a moment on our international business. This part of our business was, of course, affected in a similar way to our U.K. business, with various markets impacted in different ways and at different times from local lockdowns. The result in the period reflects this. In particular, lower sales in owned markets such as India, which had strict lockdown measures. Franchise profits were much more resilient, however, and online grew strongly. M&S Bank contribution declined, principally due to the increased bad debt provision, as well as reduced income from both credit and travel money. Lower net interest was driven by an increased pension credit, reflecting the pension surplus at the start of the year.
Overall, the group then delivered a GBP 17.4 million adjusted loss before tax. Adjusting items are detailed in the release. They include the release of a stock provision following better than anticipated sell-through of Clothing & Home stock. In addition, we have booked a charge for the organizational restructuring announced in August as part of the agenda to reduce costs and change ways of working. We anticipate annualized cash savings of at least GBP 115 million from the restructuring. Steve will pick this up in more detail. This left a total loss before tax of GBP 87.6 million. As I transition onto cash flow, let me first take a moment on CapEx. CapEx levels were obviously lower in the period, reflecting a slowdown in investment, particularly in the first part of the period.
You can see where the money is being spent with a focus in technology and online making up nearly half of our investments in the period. Looking at the full cash flow now, you may recall at the start of the year, we had anticipated drawings against our credit facilities of around GBP 650 million at the half year. In fact, we generated cash in the period and net debt fell, which I believe is a credit to the business. This firstly, was a result of better than expected EBITDA, the drivers of which I've already discussed. There are a number of other important points to note. Firstly, we had a strong working capital performance in the period due to all the various cash activities announced by the group at the year-end, with the result largely reflecting an extension in supplier terms.
It is worth noting the cash flow contains both CapEx booked in the half in addition to year-end accruals paid in the period. Overall, a financial net debt reduction of GBP 65 million in the period is strong in the context of the trading backdrop. It is worth noting that our lease obligations also reduced. Further color on the breakdown of our lease obligations is included as an appendix slide in the pack.
As a result of half-year cash generation, we have GBP 1.4 billion of cash and undrawn facilities at the half year, which, as I have said before, puts us in a strong position for the second half on how we position ourselves to emerge more strongly from the crisis. Our balance of maturities on our debt is also well spread, with the first maturity not until December 2021. Since half year end, we have traded along similar trends to what we saw at the end of quarter two. Obviously, however, there's still a degree of uncertainty in the world as we enter another period of national lockdown in England. We are well set up for the second lockdown, with much more experience as to how to trade a lockdown, a stronger online business, a better stock position, and a stronger trading run-in.
That being said, we do expect our store sales in Clothing & Home to decline further in the period of national lockdown, albeit offset by online trading and reduced costs. Our focus still is on trading as effectively as we can up to Christmas despite the disruption, and the plans we have put in place should help us deliver for our customers. Of course, we are also anticipating the final chapter on Brexit at the end of the year. Again, we are well set up for what Brexit might bring, but recognize there is still uncertainty on how it will be implemented, and particularly how it impacts our European businesses. However, I feel good about a number of things. I feel good about our cash performance and position as discussed.
I feel good about how our business has demonstrated it can react and adapt as the situation changes. I feel good that we are making real change to our business, which is setting us up well to exit the pandemic in better shape from both a strategic and cost perspective. As we recover and drive the transformation, we will do so with greater discipline on capital, cash, and returns, with an ambition of recovering balance sheet metrics consistent with investment grade in the medium term. I will now hand you back to Steve, who's going to talk about progress on the transformation program and our plans for the remainder of the year.
Thank you, Eoin. In May, we laid out how we had brought forward elements of the transformation plan to accelerate our transformation in a world that would, in many ways, never be the same again. As a reminder, they're the following. Driving faster food growth with Ocado Retail, capturing value and lowering cost in the food supply chain, simplifying the range and shifting to trusted value in Clothing & Home, turbocharging growth on M&S.com, and capitalizing on the seismic shift in the property market to create a store estate fit for the new world. In the past months, we've made decisive steps forward against our Never the Same Again priorities to ensure we emerge from the crisis stronger and more resilient. Let me take you through each one in more detail. Firstly and importantly, driving faster food growth at M&S.
Prior to the crisis, we'd made good progress broadening the appeal of M&S Food, expanding our range, making our innovation more relevant. Reducing promotions and moving to trusted value meant we were well-positioned to capitalize on the seismic shift in shopping habits which continue today. We've made further investment in price through expanding the Remarksable Value range, and value perception is now at a two-year high. During the first half, performance was particularly strong in categories we've expanded, such as grocery and meat, fish and poultry. Despite headwinds in hospitality and convenience, this meant underlying like-for-like growth was strong as customers saw they could do more of their weekly shop with M&S for the first time. In addition, over 750 new lines have been developed across categories we've historically underserved, such as organic, with many now available on both Ocado and in M&S stores.
We've also taken the best elements of the five test-and-learn renewal stores we opened last year and implemented them in new openings such as Maidstone and Notting Hill. Our renewal stores, which trial new innovations as well as showcase more of the full M&S range, continue to perform well. September 1st marked an important strategic milestone for the business as we executed the successful launch of M&S products on Ocado with fantastic leadership from Stuart. The M&S and Ocado teams have done a phenomenal job, and we're working together with a real one business mentality. For the first time, the full M&S range is now available online and means Ocado can offer more choice and better value than the previous supplier. In order to execute the switchover, the teams have substantially stepped up M&S product development in key areas such as grocery, Remarksable Value, and home care.
As I said earlier, many of these lines are also now available in store and have been well received. In addition, we've made selected Clothing & Home lines available to customers through the platform, and the initial customer response there is encouraging. Performance to date has been strong, with M&S consistently over 25% of product sales. Some of the highest participation rates since launch have been in the categories with broad appeal we are focused on growing as a food business. Importantly for M&S, the resulting synergies are on track and anticipated to be over GBP 15 million in the current year. Clearly, the last six months have been exceptional for Ocado Retail, with the business delivering 48% sales growth in the first half.
Since we made the investment in Ocado last year, there's been a step up in online sales participation and the market growth rate as the trend to online shopping has accelerated through the pandemic. This is clearly encouraging and confirms the opportunity for growth we identified at the time of the investment last year. Ocado has substantial pools of available demand ready to tap into, from existing customers looking for delivery slots, to M&S customers who are able to shop the full food range online for the first time. To ensure we can meet this, we are bringing forward investment in capacity. We are starting with 40% planned capacity growth in 2021, with three new CFCs coming on stream. More plans for rapid expansion are under development.
As I outlined at year-end, there is a major opportunity to capture value in food supply chain through product and logistics cost base, and because availability often constrains sales. Capturing this means two things. One, leveraging volume to work with supply base and lower costs, and two, reduce the distribution costs associated with servicing the network. During the first half, we worked with suppliers to remove over GBP 30 million of costs through improved terms, leveraging volumes, and finding lower cost ways of operating and building on the GBP 100 million we eliminated last year. Last year, we began our Vanguard Program, named after the store where it was first trialed. It's designed to optimize processes in the supply chain to deliver productivity benefits in store. The program was initially rolled out to 90 stores from the Barnsley depot, with sales better than control stores.
Over the summer, we've extended this further and are now in 159 stores. The results continue to be encouraging, and we plan to implement Vanguard principles across the whole estate by next summer. To help tackle availability, which was previously an issue, particularly in ambient categories, we've opened a depot in Milton Keynes with our partners XPO. This will help to ensure we have a smoother stock flow and a better position for peak trading and beyond. At the year-end, I outlined the unprecedented actions we are taking to manage stock in Clothing & Home. Those actions have helped to ensure that the Clothing & Home business has emerged from full lockdown ahead of planning sales and stock position. This is a robust performance given the headwinds it has faced from the shape of the estate and channel and category mix.
For this reason, we have been able to release some of the provision we took at year-end and are hibernating far less stock than originally planned. In May, I also talked about the opportunity these stock actions gave us to go faster and harder on the work already underway to simplify our product range, develop a more agile and efficient supply chain, and offer everyday trusted value. Our ambition has been to make three years' progress in one, and with the arrival of Richard Price as the MD in July, we now have the right team in place to deliver that. Already, we have simplified our ranges. We have increased the depth of buy-in hero categories such as denim and knitwear and made a further 20% reduction in option count for this season.
As part of our move to everyday trusted value and increasing personalization, we have removed one of the blanket friends and family offers this autumn. Going forward, we'll make further steps to reduce costs and improve stock flow through re-engineering the end-to-end supply chain under a single team led by Paul Babbs, our new supply chain director. I was clear in May that turbocharging growth at M&S.com was the priority for the business, and this remains the case. Over the first half, our online performance was strong, with growth in Clothing & Home and food on the M&S site. Strong traffic growth, improved conversion, and lower returns more than offset lower in-store orders. As a result, the latest market share data shows M&S increasing share at the fastest rate in the U.K. market, rising to the number two position.
This growth would not have been possible without the tremendous effort of our teams, particularly at the Castle Donington distribution center, who reacted rapidly to implement hygiene and distancing protocols at the start of the crisis and have been phenomenal throughout. We were able to use the investment in capacity made last year to dispatch nearly 50% more singles in the period to offset the impact of socially distanced working practices. Online growth was supported by the successful relaunch of the Sparks loyalty program, which has driven 1.5 million app downloads. Over the past few years, we have invested in developing our data and digital capabilities to enable growth in our online business. This investment, coupled with the improvements at Castle Donington, has meant we have been able to respond to the step change in online demand during the pandemic.
However, given this step change, we must go further to compete more effectively and sustain the growth we've seen. We are therefore bringing all of our online, digital, and data capabilities together as one team within Clothing & Home to embed the pure play mentality and ways of working we began to adopt during lockdown. All of this is under the banner of MS2. I am clear that our advantage is in having a seamless bricks and clicks customer offer and developing this team is about embedding a way of working to accelerate growth in our Clothing & Home business, not just to improve our website. It will work separately but in parallel with our stores business and is very much a part of Clothing & Home rather than a separate business unit. MS2 will though have greater flexibility on product, presentation, and pricing, and up-weighted focus on social marketing.
It will also lead on our work to build a portfolio of curated brand partnerships, which we started recently with the launch of Nobody's Child. The work we are doing on our end-to-end supply chain is fully integrated with this so that however, wherever, and whenever our customers want to shop with us, the experience is seamless and convenient. By harnessing all of these parts of the business under one team led by Richard Price and Katie Bickerstaffe, I am confident we can set a realistic ambition of over 40% of sales online in three years' time. The shape of chain performance across both businesses since lockdown first eased has highlighted the imperative to rotate the estate and modernize our store operations. In the food business, the top performing stores were Simply Food with good access and parking, while retail parks outperformed in Clothing & Home.
The importance of rotating the estate is demonstrated by the profitability metrics of the stores we've closed and those we've opened in the past 18 months, which you can see on the slide. The cash generated creates a virtuous circle to allow further investment. The property team is refocusing its efforts on reducing costs and managing both our asset base and our liabilities. For instance, in the first half, we regeared leases on 11 stores for an average of 5.5 years extension and achieved a 34% reduction in rent. Modernizing our estate is not just about the physical stores. It's also about the efficiency and productivity of our operations. A core part of this has been the rolling out of in-store technology through our partnership with Microsoft, as well as embedding the more flexible and productive ways of working we established during lockdown.
Bringing this together has created a substantial opportunity for cost savings and greater productivity with an annualized saving of GBP 115 million as a result. Of course, these necessary changes have a human impact and have resulted in a reduction of roles across the organization. While we deliver these changes through voluntary departures and early retirement, I would like to take a moment to thank all of our colleagues for their professionalism and dedication. Before I sum up, I want to spend a moment on how we're set up to trade this Christmas. Clearly, it's going to be a peak like no other, so we're using all the learnings from how we adapted trade through the spring and summer to make sure we do everything we can to keep Christmas special for customers and colleagues.
The health and wellbeing of our colleagues is and always has been priority number one, from the social distancing and hygiene measures in our stores and backstage to supporting colleagues who need to isolate on full pay. In addition, we've invested in an online wellbeing app on Mind, in recognition of the impact of the pandemic on mental health as well as physical health. We are building on the work we've already done to give our customers the confidence to shop with us. This includes dedicated hosts to explain the measures in place and count customers in store via an app connected across all entrances. In addition, we will operate extended December trading hours to ensure additional capacity. We're supplementing these measures with new digital tools to make shopping even easier, such as our Book & Shop app.
Online distribution capacity has been increased to meet peak demand through expanding the team at Donington, ensuring our mezzanine floor is fully operational and introducing two new auto bagging machines, they're nicknamed Penny and Percy, which can pack over 2,000 items an hour. In light of the restrictions coming into force tomorrow, we are supplementing the increase in online capacity with additional steps to upweight our click and collect offer and increase our store picking capacity. Finally, we've protected the magic and sparkle customers expect from our products at Christmas, as well as making sure we've got the right range for however customers can celebrate. To summarize, the results this morning reflects a period like no other for the business, covering exactly six months since the U.K.-wide lockdown. Despite this, we've delivered a robust performance, and I'm incredibly proud of all my colleagues.
We also made decisive steps forward in our Never the Same Again program to accelerate our transformation. We successfully delivered M&S products onto Ocado and are investing to fuel its future growth. Our restructuring, supported by our investment in store technology, will deliver a more productive store operation next year and beyond. We are building on the growth on M&S.com we delivered in half one by bringing together our data, digital, and online operations under one team as MS2 to turbocharge online growth. All of this is being led by a tighter, stronger leadership team who are already making a difference. We are well prepared to deal with the restrictions that are in place for tomorrow, as well as any other changes that may come to pass, and deliver for our customers. Fundamentally, my goal is delivering the long-term transformation of the business.
Through the decisive steps we are taking, we will deliver a renewed and stronger business in a world which will Never the Same Again. Thank you, and stay safe.
Good morning, everybody. It's Archie here. I'm here on the call with Steve Rowe and Eoin Tonge, our relatively new Finance Director. I hope that you've all had a chance to see the webcast of the results. I think we've tried to make the statement and the webcast pretty comprehensive this time so people can understand the dynamics of how the business is changing during the COVID period. The most important thing for us is probably not the financial results. They are important, of course, but what really matters to us is not so much the P&L, but the state in which the business is going to emerge next year.
I think you will have got the impression that we're coming through the crisis in pretty robust shape, and we're very, very excited about the changes that we've been able to make, which mean that we should be prepared to emerge a much stronger business as and when the COVID issue recedes. Obviously, we take questions on any issue at all. Steve and Eoin are happy to handle them. If you don't mind, when you ask a question, please could you introduce yourself? I know it all works technologically, but for the rest of the audience, they'd like to know who you are, where you're from, and it'd be great if you could stick to maybe just a couple of questions, because otherwise we'll find the short-term memory challenged and won't be able to answer everything. Two questions at a time. We can always come back.
We've got plenty of time. We'll go through any issues anybody wants to discuss. If everybody's set, shall we start off with Geoff Lowery? Geoff, do you want to kick off?
Yeah. Good morning, M&S team. Two questions in the spirit of Archie's comments. First one, can you talk a little bit more about your inventory position in Clothing & Home? Could you perhaps quantify it in pound million terms at the end of the first half? Can you talk about its composition in terms of spring merchandise being overwintered versus new season stuff? Secondly, on the Food side of the business, can you talk about what's happened to your average basket value? Joined up with that, what's happened to the profitability profile across the integrated stores versus the standalone Simply Food, please?
Okay. I think that was three questions, Geoff, but well done. Steve, do you want to kick off on Clothing & Home inventory position, and maybe Eoin can chip in with some numbers?
Thanks, Archie. Morning, Geoff. The first thing to say, I think that the inventory position that we have today compared to that which we forecast at the start of lockdown is significantly better. We talked about the principle of having to cancel or move about GBP 1.8 billion worth of clothing stocks, and do that through a process of some cancellation, some hibernation, and then reductions. I can tell you we traded ahead of our scenarios. The work the team did was first class in terms of working with the supply base to building more flexibility. We've actually been in a position where at the end of the spring-summer, less than half the amount that we thought we would have to hibernate has been hibernated. It's about GBP 100 million. This is all what I would call core and seasonal core merchandise.
There is no excess terminal stock floating around the business, so I'm really pleased with that. In terms of how we structured the buys for this autumn, I said earlier that the work that we've been doing, in terms of restructuring the ranges, we accelerated. In womenswear, for example, there are now 30% less lines than there were two years ago, and that's meant that we have bought deeper into those fantastic value wardrobe staples that we've got. You'll see that really in our ranges now. We also made a decision not to chase down more winter merchandise. We planned that we would bring forward in key areas such as knitwear, denim, et cetera, the spring merchandise earlier should we need it as we run into Christmas peak.
I'm anticipating a little bit more reduce than I would have liked at Christmas because of this current lockdown. Again, a reminder, 60% of what we sell is core and seasonal core, and I think the number won't trouble the scorers, I think would be the right way to say it.
Just to add the number to that, actually, so of the GBP 663 million of inventory position that we had at the end of the half, just over GBP 400 million of that was related to Clothing & Home, which is more than GBP 100 million less than last year at the same time, which reflects what Steve has just said. We're going into this lockdown not with the same level of concern we had in relation to stock than we had previously.
I think that covers the stock position. Archie, do you want us to move on to the shape of the chain?
Well, I think Geoff's question was about food stores relative performance of full line and standalone and average basket size.
Yeah. I think you can see from our statement that the shift in the estate has really all been about food and the performance of Simply Food retail parks driven by the food business has been strong. Anything that was associated with a travel location, the railways and of course, the airports, has been poor in the period through lack of traffic. As we go into lockdown, we've had to close some of those back down again. The average basket, though, as you can imagine, has been up really pretty significantly. It's reduced a little bit through the half, as you can imagine. It's still held up really significantly all the way through the half. It's over GBP 20 in terms of average basket size.
Obviously, that stands us in good stead going into the second period of lockdown, because effectively we don't have to readjust where we're trading well into that lockdown period.
Understood. Just on the store, the comment on food was really more how much of your profit comes in food now out of the integrated stores versus the standalone Simply Food?
Okay. Well
Look, Geoff, traditionally, it's been a bit about half and half. I think at the moment it's more weighted to food, obviously, because in the first half of the year, 40% of our clothing footprint was shut down. We're slightly abnormal at the moment. I would expect it to move back towards more normalized levels, but with more of a weighting to food as we come out of COVID, and particularly as we're driving MS2, the digital business we think will probably now be about 40% rather than the third that I talked about before.
The other thing I would add to that is it's not necessarily about Simply Food versus full line, it's actually where the type of location as well. Like retail park, full line stores are, for example, trading very well. It's also to do with the location of the store.
Yeah. Geoff, I don't think we have a precise answer to that question at the moment, but as we've said before, in normal times, I think it'll be true again, but the majority of the food profit still comes out of full-line stores.
Understood.
That's not surprising because those are the largest stores.
Understood. That's great. Thank you.
Okay. Thanks, Geoff. Shall we go on to the great Clive Black?
Oh, the very great Archie Norman. Thank you very much. Couple of questions, please. First of all, could you give us a feel for the state of play for your real estate strategy? In your presentation this morning, you touched on that a few times, guys. I just wondered if you could characterize where M&S is today and what you think the priorities are on the retail strategy. Secondly, just in terms of MS2 in today's news, what will be a good outcome? What would be the KPIs as a measure of MS2's performance, please? Thank you.
Thanks, Clive. Steve, do you want to start on real estate?
Yes. Thank you, Archie. Thanks, Clive. The first thing is we have had an ongoing program to reshape the estate, and that is some closure, but also some churn. During the course of this period, we've opened new stores in places like Maidstone, which have performed particularly well, and we will continue to do that. What we can see from the change in the shape caused by lockdown is it's the right direction and the path we're taking is absolutely right and we'll continue to do that. We think that this will be accelerated by changes to travel, particularly changes to working habits, and we will see some change to our city centers.
We also see that our Simply Food and retail parks that we've been building are still strong, particularly those, of course, with car park access, and we see the opportunity to continue to increase our food footprint. I think that importantly, and we'll come on to MS2, what we see now is that probably about 40% of our business in the future is likely to be online, and that's why MS2 is absolutely pivotal to what we're doing in the next stage of the transformation.
Can I just add just a little bit to the retail? I've spent a lot of time on this since I've joined, as you can imagine, and just to add a couple of points to it. One is obviously taking cost out of the system is obviously going to be really important, and a big component of that was the restructuring that we announced in August, which is going to generate at least GBP 115 million of savings on an annualized basis. That's obviously one building block. We think there are other building blocks of cost for us to continue to take out of store operations, which we're actively working on at the moment. Then secondly, as Steve mentioned, because we're forecasting a channel shift, obviously, we're going to be accelerating our store rotation programme.
The way we're thinking about this acceleration of the store rotation programme is to think of it in a self-funding basis, which is to generate funds through store disposal and use those to fund and to accelerate the rotation of both store closures and relocations.
Okay, thanks. Steve, did you want to add anything on MS2? I think it's worth just responding to Clive's point about what would success look like.
Absolutely. Sorry, the first thing is that MS2 is really a pivotal moment for the business. The work that we have undertaken over the last couple of years and more recently, whether it be the tech stack, increasing capacity at Donington, the work that Katie and Jeremy have done of relaunching Sparks and building the digital data engine means that right now is exactly the right time to capitalize on the strong performance that we had in the first half online, where we're now number two in the market. MS2 signals almost an inversion in the business about how we're thinking. It signals that we will move from being a store primary focus first, online second to an online business with a store portfolio. We'll maximize the omni-channel opportunities.
We saw earlier in the crisis that we operated almost as a pure play. This needs to inform our thinking about the ranging, the price structure, the promotions. It needs to make sure we've got an end-to-end supply chain which is appropriate for an omni-channel business. Within that, has the ability to provide great value products in volume, which is helped by our buying stance, but also that fast trading and nearshore capability that you get from learning. Importantly, enables us to leverage the data that we've built. 20 million customers, several hundred attributes means we can start to offer a much more personalized experience. We think this is absolutely the right time. We've got the right team in place, with Richard and Katie driving it.
This, I think, starts to underpin this more than 30%, more like 40% online over the next few years.
Thank you very much for that, guys. Can I just refer relate back to the real estate question with just one follow-up? Are you therefore saying that the estate in its current shape is broadly there in terms of number of stores? We're not looking at another chapter of major store closures from Eoin's point about disposals and recycling funds. Thank you.
Well, to be honest with you, I don't necessarily want to quote exactly what we're modeling in terms of store openings and closures. Others say there's a combination of both. The rotation means exactly what that is. Means closing certain stores and opening certain stores. I think that's the way to think of it.
I don't think we can get too much-
Clive
Sorry, Steve.
Sorry, the point I was trying to make is that we said we were on a program to close circa 100 stores. Some of those will be recycled. Some of those will be full line. The vast majority will be to continue to drive the food business with larger Simply Food stores as a destination. There is still a further contraction of clothing space that is required over the experience.
Sorry, yeah, that's actually a fair point, Steve. The projections do predict more for closure of full line stores and opening of Simply Food.
I think the other thing, Clive, we can all see is that COVID has accelerated changes in high streets and city centers that were happening anyway. Quite a number of our competitors have closed stores or even gone out of business. That's changed the shape of the high streets that were hanging on before are now looking in difficulty. There's some shopping centers we all know that are in pretty poor shape. We shouldn't be blind to that. It does mean that we have to respond in an athletic way. I don't think it's a numbers question so much as Eoin said, if anything, this means, and it's obvious to everybody, that we need to accelerate the program. There will also be great opportunities to open new stores, the demand for good retail real estate is low. There's opportunities for us in this.
Part of the thing is that where we can find a great new store, actually, we've had two really good store openings in the last few months, full line stores. Where we find opportunities for a new store, that makes it much easier to relocate or close the old stores, sometimes consolidating two or three into one.
Thank you very much, guys. Conscious of time.
Okay. Thanks, Clive. Shall we come on to Simon Bowler from Numis?
Hi, thanks, and good morning, all. A couple questions from myself. First is on the MS2 piece. You spoke specifically in the presentation around giving that team flexibility around products, pricing, and presentation, and I just wanted to understand what in practice that meant. Is this team going to be running a separate buy or pricing separately to how the stores look and feel? If you could just touch on that. The second question was just, again, on the store estate and just wondering to what extent your own stores could form part of ongoing store closures and how much progress you'd made in thinking about alternative use of the space that you own within the business.
Okay. Steve, do you want to do MS2, and then I guess, Eoin, you'll want to respond on the store issue.
Yes. Thank you, Austin. I said MS2 is pivotal in the business. It really is, and it does have to invert our thinking. In terms of range and the buying process, the MS2 will inform the buying groups about what they need, where they need to focus and where they need to buy and any amendments they need to buy from the current position. The key thing is we'll be thinking about online first rather than as a subsection of, I don't know, Marble Arch's catalog. It does mean there'll be different ranges. That's appropriate. The different specialist ranges perhaps online, but also make sure the product is appropriate for distribution through couriers. That may mean at certain times, different prices and different promotions.
The key thing is this is underpinned by data, which I mentioned earlier, and is informed by customer trends, which we can see much more quickly online, and the ability to analyze and react is also much quicker. I think that you will see those differences manifest. The key thing is it's still bought within the business, and I think that's why we said it's an integrated division within Clothing & Home, but we're operating it separately to make sure that the focus of the business and that change of emphasis that's so important is clear to everyone within the organization.
Yes, Simon, let me have a go on the store question. There might have been two aspects to the question. Let me see if this works. You're right in terms of our own stores. Is there an opportunity to utilize the store in relation to value, to generate value to help fund some parts of our store rotation? Yes, that is the answer that I was explaining earlier. That's one aspect. The second aspect is store space itself and whether we're going to look to actually utilize our store space slightly differently. That is another feature of what we're going to be doing over the next period of time. The first aspect of that is moving some Clothing & Home store space into food, which is what we will be looking at in selected stores. I hope that answers your question, Simon.
I just want to make sure I got to your point.
Yeah, I guess a bit I was thinking around, I think a couple of your peers have pulled out examples of turning space into office space in certain locations or different commercial use, et cetera, and giving you for a lot of the stores where you own the real estate, whether that was an opportunity.
Yeah, I think that's what is embedded in what I'm saying in relation to a self-funded store rotation programme.
Yeah. Simon, everybody knows we've got multiple stores in very different locations, different sizes, et cetera. Over a period of time, that needs to be addressed to get into more consistent portfolio. We're not announcing today that we're going into the residential housing business, put it that way. There are development opportunities. There are opportunities to bring in concessions to rationalize the space, but there's not a single solution. It's case by case. Simon, just on the MS2 thing, from a sort of helicopter view of what I'd add is that I think that what I've seen, not just here but around the world, is almost all retail businesses struggle to adapt to the real changes that online creates. Of course, in the U.K., we probably have the most advanced Clothing & Home online business probably anywhere or thereabout.
We have very strong pure plays to compete with. The position is more stark. What you find is that traditional retailers obviously run the business on a retail rhythm, on a stores-based rhythm. Promotions are set up in a fairly slow way because they're very costly to set up in stores. The range cycle, when new range comes in, is set up along seasonal launches that require visual displays in stores. The exact range you carry is dictated by what you can sell in sufficient volume in multiple locations around the country. What we're saying is, when you look at it, that the difficulty is that you're up against pure plays who don't have those inhibitions, and we've got to compete with them.
The purpose of MS2 is to enable us to compete, in a sense, like a pure play, and that means that there will be differences with how we trade online. I don't know what those are. Steve will have a view on what is allowable and what creates too much tension. The purpose of MS2 to set up the organization so it can surface those tensions and start to create those differences and explore how we trade. From a data and customer point of view, we'll remain omnichannel, and they won't know about MS2. We'll have a single seamless relationship supported by the data and Sparks program that Katie and the team have led, which we think is really going to be market leading in the U.K. or as good as anybody has. That's the sort of philosophy behind it.
I think from externally, it doesn't look like a big change. Internally, it's quite significant.
Okay, great. Thanks. That was a really helpful cover.
Okay, thanks, Simon. Shall we go on to Anne Critchlow from Societe Generale?
Thank you. My question is about food price inflation and what you saw during the first half, also more generally, what your current thinking is about price positioning in food against the market.
Steve?
Yes. Thank you, Anne. In terms of our food business, we haven't necessarily seen the same trends as the rest of the market. If you remember, Anne, we've been on a program under Stuart, really to deliver trusted value throughout the M&S Food business. The team have done a great job, frankly. Our value credentials have improved substantially over the last year, again, more recently, because we've been already lowering prices and taking off the sort of difficult promotions that we had in place. We were continuing that strategy, and therefore inflation has been minimal for us. In the marketplace, we know that others have had inflation where they've removed their promotions. We concentrate on our values, frankly.
As you've seen from the work we did with Ocado, as we've launched it's become clearer to our customers and others about just how good our value is. The remarkable ranges that the team introduced down have been phenomenal and are really getting great uptake on Ocado, too.
Okay, great. Thank you.
Anne, are there any figures we have on food price inflation we want to share?
It was very low ASP movement in the H1.
Yeah.
It just reflects what Steve just said.
Can I just say, food price inflation is always not quite as much a science that people pretend it is. Of course, it depends on what's happening with your mix and what individually you're doing on pricing. Just to add to that, because I think it might have been understated, I do want to say as Chairman, I do think the food performance has been very strong. It's quite hard to tell with COVID because we've had the closures of a lot of the franchise stores, obviously the travel stores, airports, et cetera, and the catering business, the cafes, have been closed for large periods. That comes within the food numbers. In addition to that, our Food business is much more weighted towards food to go, prepared meals, et cetera. Less towards eating at home.
It's not ideally placed for a sort of COVID lockdown type situation. Despite all that, if you strip all that out, I think I'm roughly right in saying the underlying like-for-like growth in food has been over 8% during the period, which is a pretty good result. Then on top of that, we've got the Ocado launch, which has gone very well. Lost in the fog of all the results, I don't think anybody should be under any illusion. We've had a pretty strong period for Food.
Thank you.
Just to build on that, the 8% is absolutely right. I think what I've been impressed with in the team's ability is how they use the strategic direction become more relevant to a family customer. Clearly was the right one, but they're able to pivot much more quickly out of those categories you mentioned and fill the void with frozen, with groceries, with a broader range of protein and produce. We've seen customers pick that up and again, broaden the basket that they've been shopping. Yeah, you're absolutely right. The number of the core food business has been remarkably strong and ahead of the overall market in terms of store performance.
Okay. Look, we've got a few more questions to come. I'd like to get through another four or so. We need to crack on a bit. Thanks for that. Geoff Ruddell from Morgan Stanley.
Yeah. Hi, everybody. Yes, Geoff Ruddell, Morgan Stanley. Could I just ask a little bit more about Ocado? Is there any reason it shouldn't be as profitable in H2 as it was in H1? Just thinking into next year, obviously the business is capacity constrained at the moment. There's another 40% capacity coming on next year. Obviously it's too simplistic, but is it theoretically possible that you could make 40% more profit from that business next year as the capacity comes online? Does the sort of lower levels of efficiency as the new capacity comes online reduce profitability?
Steve?
Do you want to take this, Eoin? Profitability.
I'll take the profitability, maybe you can talk about capacity, Steve. On the profitability point, it could be that the second half is as strong as the first half. A lot of the conditions in the first half were everything was in our favor in that regard. Obviously, very high orders, very high units per basket, a very strong shape of the week in that there was a constant delivery pattern through the week, which drove both CFC efficiencies and delivery efficiencies. Obviously, we had the one-off, the exceptional item of the insurance, which actually all of those could repeat in the second half, including the insurance receivable, because it's a business continuity receivable. I think it's fair to say, Geoff, it could.
It all depends a little bit like we're all kind of looking crystal ball gazing into what exact conditions are going to be like post-Christmas, and whether they actually replicate in such a kind of perfect, whatever the opposite of perfect storm is, way. Certainly, we do expect continued strong performance of Ocado Retail.
In terms of capacity, first of all, we've been delighted by the reaction of customers, both existing Ocado customers and some of the new ones that have gone there to our products. It is overweight within the basket compared to our original estimates. We are selling a much broader range of merchandise in a different shape to that which we've traditionally done in stores, i.e., more of a broader basket. We're very pleased with that. Because of the unique situation with COVID, there's not a square inch of capacity, frankly, at the moment. That is a double-edged sword. We can only bring a limited number of customers on now, but what it shows you is that the demand for M&S Food online is strong, and as soon as we do release the capacity, we think we'll have very quick uptake and fulfillment.
Now, that capacity really starts to come on in the second half of next year from around September onwards as Purfleet, Bristol, and Andover start to come back. As you said, it's about 40% additional capacity. Capacity, again, is a sum of number of customers times number of slots times size of basket. We're looking at that quite carefully as we come out of this Christmas period.
That's great. Thank you.
Okay, thanks, Geoff. Richard Chamberlain from RBC. Richard, do you want to fire away?
Yeah, thanks. Archie, Richard Chamberlain, RBC. A couple from me, please. On the lower marketing activity, which I think was a contributor to lower sort of central costs, just obviously seeing a shift to more digital marketing, how much of that do you think is sustainable or how much do you think will come back in either the second half or next year? That's the first one. Back on Ocado, obviously the synergies are starting to come through now on the margin. Has that led you to change your thinking at all about how much of those synergies you can retain going forward without passing them on to customers in terms of a more competitive offer, et cetera? Those are my two questions. Thanks.
Steve?
Yes. Thanks, Archie. In terms of the marketing, we worked very quickly at the start of the lockdown to pull down all of our cost base in the right shape to get through the start of the crisis. As Archie said earlier, we were a business that turned into a pure play in clothing practically overnight, and we quickly pivoted our marketing spend to reflect that. The team have really started to accelerate the spend we've got online. We've upweighted paid search and other digital channels, both in Clothing & Home and Food. You'll see that continue. You're going to have a great food advert advertising the fantastic Christmas program we've got in terms of products, we're not going to do the big multi-million pound Christmas advert. We don't think it's the right thing to do.
Therefore, there is a lower spend all year, a much more targeted spend using digital channels that Katie and Jeremy are focused on. I think as we look at next year, will some of that above-the-line spend come back? Of course. We've still got more than half our business in stores. It will be a different shape, we'll continue to push on the digital marketing. The one thing that's good about digital marketing, by the way, is that there's a famous adage when you say to marketers, how effective is your marketing? Half the spend is brilliant, half the spend is not, they never know which half is which. The one thing you can be clear on with digital spend is that you get a very, very quick analysis of your return on investment. Really quick, it's really transparent.
You can max out in an optimal way without taking very much risk.
Yeah. Okay.
Maybe I'll have a go at the Ocado synergies. It's Eoin here. I think it's probably a little bit too early to say, actually, because obviously, look, we're very pleased with the cutover in relation to our participation in the Ocado basket. I think that's obviously a tick, and that's great. In relation to synergies, it'll all come down to the actual mix effect, in particular, as to whether we think we can drive more synergies out of it. I think it's still a little bit too early to say, but obviously, it's better to have a higher participation as a starting point.
Cool. Okay. Thanks very much.
Okay. Thank you, Richard. We're going to take two final questions. Shall we go to Demetris Demetriou from Schroders?
Yes, thank you. I'm going to be quick. My first question is around the statement in your press release about releasing some cash from your freehold estate. I think part of it has been answered. I just wanted to understand if, even to what extent, some of that cash is potentially used towards net debt reduction. The more general question is about how do you prioritize debt reduction in general and perhaps an aspiration to return to investment grade in the near or medium term? Thank you.
Okay. It sounds like one for you, Eoin.
Yeah.
You lost wifi, great Eoin.
Well, look, I think we made a statement in the outlook statement around how we're thinking about our focus on cash and cash generation over the next number of years. It's obviously a balancing act that we have to look at here because we've got to look to fund both the transformation and to strengthen the balance sheet. I have said in the outlook statement that we are seeking to return to a balance sheet which has investment-grade metrics in medium term. That, by definition, means that we are going to look at both. We're going to try and deliver both. The release of funds out of our freehold estate to help fund the rotation, that's partly serving driving the transformation because part of the transformation is we have to rotate our estate. We have to improve our estate. That's part of the transformation.
I think it's fair to say, from my perspective, the medium-term picture is to try and drive back to investment-grade metrics.
Thank you.
Okay. Thank you. Thanks. Okay, let's go last but never least to Tony Shiret from Panmure Gordon.
Thank you very much. Didn't expect to get on this one. My question is about MS2 and its implications. First of all, I'm surprised you haven't sort of given it a separate manager. Strikes me, Richard and Katie have got plenty on their plates as well as this, so I wonder why or whether it would not have more force if it had its own sort of champion. Secondly, following on from that, presumably, it will have implications for the range that you sell in Clothing & Home, and also whether you sell sort of ranges that are more sort of fast fashion responsive to change, sort of short-term market movements, which will in turn lead to needing to organize the buying rhythms differently. I sort of wonder whether we are going to need to see a sort of wider reorganization back this up. Thanks.
Yeah. Okay. Very good question. Steve, do you want to head that one?
Certainly, Archie. Yeah, great questions, Tony. There are, of course, implications. What I would say is that Richard and Katie, as the directors responsible for Clothing & Home and digital development respectively, of course, lead this. Our e-com business is run by Stephen Langford, who joined us in the summer and really does have clear focus. The key point here is we are inverting how we do things, that does have implications to how we buy and how we market and also on the end-to-end supply chain. Now, fast fashion is not something that I would particularly describe what we're doing. Do I think we will have a different supply chain that reacts in a different way? Yes, I do. Is that work that's going on in the product engine rooms at the moment? Yes, it is. You can see it already.
We launched one of the first curated brands online, Nobody's Child. The reactions of that from customers has been phenomenal. Part of the learning from that, and the reason we're so keen on that, is that also comes with a U.K. and near-shore supply base and very fast response times. As well as us developing some of that faster response and learning, which will be key, we can also ask our partners to do that, too. That's how we'll look at it. It will mean changes. These are good changes. We've done a lot of work on Donington in turn, the tech stack, moving to the cloud search. Still more to do. I'm convinced by the word conditional. I think this will transform what we're doing online.
Historically, though, the buying departments have been pretty strong politically. I just wonder how you're going to make sure that you can drive your strategy down into the buying departments.
I think that's one of the reasons it is important that Richard, the ownership here is with Richard within Clothing. This is a division within Clothing & Home, for those of you who've been around before. We have had this as a completely separate entity, and most of us would observe that it didn't work. We have to invert our thinking. We have to transform how the business thinks about online. I think we've started to see that with the performance. We do have to remember one of our big strengths is the fact we are an omnichannel business. We've got to change the thinking, digital first, online first, in how we buy, how we supply, how we market, and how we think about customers and our proposition.
I think that this is the first part of a structure, and it won't be the last, by the way, in terms of how we should think about buying. This is the right thing to do, and it's the right time to do it.
I think, Tony, your question is about want of balance. This is a big, big shift. You shouldn't make any mistake. Richard and Katie are going to drive this very hard. Stephen Langford is running it. Jeremy Pee brings in the data side. It's a pretty powerful shift for the organization. Steve's entirely right to say, look, at the end of the day, it is complicated. It's necessarily complicated. You have to rely on the product engine, which is generated by the buying and merchandising teams. Their knowledge of product and sourcing and volumes and what sells and pricing is always going to be the driver for the business, and it's the core of M&S. What this does do is create a demand force at the online end.
As Steve says, is it likely that the online business will be saying, We don't mean fast fashion, but more fast sourcing, near sourcing, as Steve has said. Yes, it is. That is quite likely. That'll be good for the whole business because we'll learn more about it and move faster.
Thank you.
Okay. Thanks, Tony. Thanks, everybody. I think we'll draw a halt there. Just because we're closing this session doesn't mean we're not open to questions during the day. Eoin and Fraser, and of course, Steve and I, if necessary, are very happy to field any questions people want to come through. I think it's been a good set of results. It sounds strange to say good in this context, but compared to where it might have been, fantastically better. The business is in pretty robust shape. I know Steve and I were talking yesterday. The store managers and the teams, although we are going to lock down now, obviously, everybody feels a little bit glum about that. Actually, the news from the stores is that we're in much better shape than we were first time around.
I think there's every prospect we'll trade as well as we possibly can through Christmas. Steve, anything you want to, any last word from you?
No. I think that's absolutely it. The key thing for us is in the short term, we do have to trade Christmas. We are, as you say, Archie, much better set up both operationally, and I think in terms of product shape to give the customers what they need. It will be a different Christmas. On my mind, of course, is as we roll out of that, we do have Brexit to attend to. Again, I think, as we discussed at the board launch, we are very well prepared with what we can see in front of us. As soon as we're clear about how we come out, Gary, I think the buying teams driven by MS2 are in much better shape to really supply the merchandise that is appropriate for a world that's frankly Never the Same Again.
All right. Terrific. Well, thank you, everybody. Thanks for your time. Thanks for your questions. Do please get in touch with anything else you want to discuss. We're all available. Have a great day. Bye.
Thank you.