The long-promised turnaround at Marks & Spencer has gathered pace with the High Street stalwart recording a leap in profits and sales, and the company pointed to a good start to Christmas pre-orders.
In its first update to the City since securing a return to the FTSE 100 four years after it dropped off the list, the food and clothing retailer did caution the outlook remains uncertain, with erratic weather and higher interest rates factors that could hit consumer behaviour.
But chief executive Stuart Machin largely pointed to “strong” results for the six months to September 30 and in a call with reporters toasted encouraging demand ahead of Christmas.
He said early orders of festive food are up 22% on last year and that a £59 black sequin dress for this party season sold 5,000 units in a week.
In encouraging signs for the high street at the start of a key trading period, Machin said: “There’s no doubt spirits seem to be high for Christmas.”
Machin, who was promoted to the top job in May 2022, said: “There will be challenges and headwinds in the year ahead and progress won’t be linear, but we are ambitious for future growth and are driving what is in our control.”
Shares in the company leapt 10%, or 22.6p, to 247.8p as investors looked to focus on the first-half numbers and a dividend being restored: 1p per share was proposed.
Pre-tax profits were £325.6 million. That was 56.2% higher than a year earlier and ahead of what analysts had pencilled in.
Earnings were helped by cost savings, including from improving efficiency across the supply chain, and revenue climbing 10.8% to £6.1 billion.
Like for like food sales rose 11.7% and comparable sales in clothing and home gained 5.5%
Machin said: “Looking ahead, trading momentum has been maintained through October, with customers responding positively to our Christmas ranges. There will be challenges and headwinds in the year ahead and progress won't be linear, but we are ambitious for future growth and are driving what is in our control."
The firm had a busy first half investing in the company and trying to attract and retain shoppers.
Measures included a £23 million investment in London stores, lowering prices on 200 food products in June, and having actress Sienna Miller be the face of the Autumn womenswear campaign.
Last year M&S outlined plans to close 67 “lower productivity, full line stores” over the next five financial years, but during the same period it will invest in launching 104 more Simply Food sites.
M&S suspended dividend payments at the start of the pandemic to protect the balance sheet, but it has now returned them. A dividend of 1p per share was declared today.
A note from RBC Capital Markets said: “We think M&S has been making progress with its food business, helped by an improved value for money perception, while its clothing offer has benefited from an improved digital offer, third party brands and a better bought range.”
