Marks & Spencer First-Half Results – What The Analysts Said

By Steve Wynne-Jones
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Marks & Spencer First-Half Results – What The Analysts Said

British retailer Marks & Spencer reported an impressive 75% increase in profit in the first half of its financial year, with its food sales rising by 14.7% in the period and clothing & home sales going up by 5.7%.

Here’s how leading industry analysts from AJ Bell, Retail Economics, Wealth Club, Shore Capital and GlobalData viewed its performance.

Russ Mould, AJ Bell

“Marks & Spencer has been on a roll over the past year, as its food and clothing resonate with the public. It’s no wonder the company’s share price has been soaring – up 160% since October 2022.

“The decision to cut prices on certain food lines has proved wise, making its products appeal to a broader customer type. Clothing has long been the problem child in the business, and it now seems to have found the right formula and not have half its shop floor collecting dust with unfashionable items or 75 versions of the same product.

“Profit growth over the past half-year has been impressive, which, along with a stronger balance sheet, has led to shareholders being promised their first interim dividend in four years.


“Marks & Spencer positions itself as a retailer that provides good value for money. Clothing products and food items are good quality, and that status tends to be remembered by shoppers. They want their cash to go a long way, and Marks & Spencer has reclaimed its place as one of the first places shoppers go when wanting more products.

“Admittedly, the turnaround story has been playing out for a very long time and is far from over. In chief executive Stuart Machin’s own words, ‘Lots done, lots to do, lots of opportunity.’”

Richard Lim, Retail Economics

“[Marks & Spencer] continues to showcase a mightily impressive turnaround of the business, with these latest figures demonstrating significant improvements in sales and profitability. Their renewed product focus, investment in omnichannel and sophisticated use of data has been supercharged by a reenergised culture.

“However, the outlook remains challenging, with the combination of higher interest rates, weaker economic growth and geopolitical events creating significant uncertainty.”


Charlie Huggins, Wealth Club

“In a difficult trading environment, M&S has delivered excellent results, with notable progress in food and clothing & home, and both businesses outperforming the market. With momentum having continued into October, the turnaround plan to revitalise the brand and reignite growth is well on track, and the group can look forward to the Christmas period with confidence.

“However, pressure on the UK consumer could intensify, heading into 2024, as the impact of higher interest rates really starts to bite. This, combined with tougher comparatives, means M&S is striking a tone of caution, looking ahead to the second half. This may disappoint investors.

“Overall, M&S is delivering strongly on the things it can control and seems to be in a much better place now than it was a few years ago.”

Clive Black, Shore Capital

“Some seven years ago or more, under the leadership of Steve Rowe, with recently appointed chairman Archie Norman alongside, M&S commenced a journey for wholesale modernisation – literally, all stones were turned in the business. It has not been easy, for sure, with plenty of ebbing and flowing, but recent quarters are signalling the potential of this business under Mr Machin’s tutelage, most evidently to notably expand in UK food whilst creating a materially more profitable non-food venture that is more stable and well set.


“Much has been done and, happily, achieved, but the journey to us has a long way to run yet, e.g. the completion of the modernised end-to-end C&H supply chain, where early savings from the network plan are stated to be emerging, and UK real estate right-sizing. Following the re-rating of the equity in CY23, the upside in the share price from here is perhaps a bit more about earnings momentum in the short-to-medium term, post any market reaction to this update.

“However, if our much sought-after sequential earnings growth continues to come through, set against a backdrop of a strong balance sheet and appropriate capital allocation, then the rating potential, especially noting the EV/EBITDA multiple, which trades at [an approximate] 40% discount to the fine Next equity, could also grow.”

Pippa Stephens, GlobalData

“M&S’s turnaround strategy continues to bear fruit, with its more trend-led clothing ranges and greater value for money within food helping it strike appeal among a wider demographic of shoppers.

“The retailer’s food division achieved an outstanding performance during the period, with UK revenue rising by 14.7%, to £3.8 billion. Its ongoing attention to value and quality, including price reductions on over 200 lines and quality upgrades to 1,000 products, has aided its resilience amid the tough economic climate. Sales of M&S though Ocado increased by 6.9%, as its shoppers prove difficult to convert to shopping for groceries online, however, it has reported an uplift in active customers, providing some promise for the rest of the year.


“Clothing experienced a 5.7% increase in UK sales, to reach £1.8 billion, as it continues to show a huge turnaround from the declines it was reporting prior to the pandemic.

“M&S is right to continue investing in stores, as consumers increasingly appreciate the experience of shopping in person again. Alongside November being its biggest-ever month of store openings, it also remains dedicated to remodelling existing locations – a much-needed investment, as many of its older stores look tired and outdated. While the online channel slightly underperformed within clothing & home in H1, growing by 4.6%, the retailer expects a return of stronger online digital growth in the year ahead, with an ongoing focus on this channel crucial to stay ahead of competitors.”

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