Marks and Spencer shares up on double-digit growth as turnaround pays off
Marks and Spencer has reported another bumper set of results ahead of the golden quarter as its turnaround plan continues to pay off.
The company’s share price rose by nearly five per cent in early trades and reached a level not seen since 2016.
Profit before tax rose 17.2 per cent to £407.8m, up £348.1m year on year, and operating profit rose 34 per cent to £213.1m.
Food sales rose 8.1 per cent, while higher demand for its womenswear lines pushed clothing and home sales up 4.7 per cent.
Marks and Spencer said its structural cost reductions were “on track”, with around £60m saved in the period, “largely offsetting cost inflation”.
Chief executive Stuart Machin said: “Executing our strategy to ‘Reshape M&S for Growth’ has again delivered an increase in customers, sales value and volume, market share, profit and returns. Both food and clothing have now delivered market share growth for four consecutive years.
“Central to our strategy is our vision to be the most trusted retailer, with quality products at the heart of everything we do. This is not something we take lightly, and our relentlessness in delivering customers the best quality, innovation, service and value only available at M&S underpins our trading momentum.
“The easy thing to do today would simply be to say that these are good results, but that wouldn’t be the right thing to do. In the spirit of being positively dissatisfied, we have so much to do over this year and beyond. Despite our strong trading momentum, there is much more opportunity for future growth and that energises us.”
The pandemic had ushered in the retailer’s worst period in decades, but its Reshape for Growth’ plan has seen the company spruce up its online shopping capabilities, partner with hip young brands, and redirect investment from struggling stores into those still turning a profit.
The company has also continued to extend its “Remarksable Value” range, launched in 2019, investing more than £100m in lowering prices as shoppers look to cut spending amid the tail end of the cost of living crisis.
Business reporter Joel Hills has said that M&S faces a £100m cost increase due to last week’s Autumn budget, which would likely have a subsequent effect on food prices, although M&S have described the impact of the budget on its business as “uncertain”.
Marks and Spencer: International sales falter
Machin said that Marks and Spencer was “resetting priorities in International to drive future growth” and “acting now to improve short-term performance.”
The company said an international reset was “underway”, with a new leadership team in place.
It said that “actions have been taken” to lower stock levels, improve the range, reduce operating costs and strengthen leadership, and it expects the business to stabilise in the next year.
Ocado shares up on M&S success
Shares in the online grocer rose five per cent this morning in early trades, before paring back gains to 2.5 per cent later in the morning.
M&S owns half of Ocado, although the two companies are currently embroiled in a legal dispute over payments related to Ocado missing contractual targets.
M&S said that its vision for Ocado was still “to combine the magic of M&S Food with Ocado’s unique and proprietary technology to offer unbeatable choice, unrivalled service and reassuringly good value, underpinned by efficient and effective operations”.
However, it said that whilst the customer proposition is “becoming more competitive”, there is “more to do to improve overall levels of profitability before investing in new site capacity”.