Marks & Spencer Full-Year Results – What The Analysts Said

By Steve Wynne-Jones
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Marks & Spencer Full-Year Results – What The Analysts Said

Marks & Spencer has reported a 9.9% increase in sales in the year to 1 April, with food sales up 8.7% and clothing and home rising 11.5%, however adjusted operating profit at the business was down 11.6%.

Commenting on the retailer's financial year, Stuart Machin, chief executive said, "Despite facing significant headwinds, I am encouraged by the strong foundations established last year and excited about what we can achieve in the year ahead."

Read More: Marks & Spencer Expects 'Modest' Revenue Growth In 2023/24

Here's how industry analysts viewed its performance:

Charlie Huggins, Wealth Club

"In a difficult trading environment, M&S has delivered solid results, with notable progress in Clothing and Home. With the new year having got off to a good start and plans to reinstate dividends, the turnaround plan to revitalise the brand and reignite growth appears on track.


"It is too early for M&S to declare victory. M&S shareholders are all too aware that one swallow doesn't make a summer. M&S needs to sustain growth in sales and get margins moving in the right direction. This will be difficult given a backdrop of intense cost pressures.

"Nevertheless, there are more reasons for optimism now than there have been for some time."

Russ Mould, AJ Bell

“It feels like the longest turnaround in corporate history, but there are finally signs that Marks & Spencer has struck the right formula. Rather than the usual story of strong food sales making up for weakness in clothing, both parts of the business are now doing well.

“Marks & Spencer has always been the go-to place to buy pants and socks, but the rest of its clothing line has generally been seen as deeply unfashionable. Over the years we’ve had various people try to solve this problem with little success.


“More recently, a bigger push on athleisure has helped to bring in a younger crowd, while a greater focus on mainstream items such as casual dresses and denim have made the company more appealing to the general shopper.

“Food sales continued to be strong with the company increasing its market share. A decision not to pass on the full impact of cost inflation has worked wonders, with much of sales growth being driven by volume as prices on many items haven’t gone up as much as other grocery sellers.

“It’s not all good news, however. The online joint venture with Ocado is undergoing a ‘reset’ as growth hasn’t matched expectations. It is trying new things, but the jury is out on how fast it can achieve success."

Orwa Mohamad, Third Bridge

“M&S is struggling to compete with the big four supermarkets at the moment, as shoppers attempt to limit their grocery spending and opt for more affordable food items. This is translating into less frequent, smaller shopping trips. M&S lacks the physical retail space to compete in terms of the product variety bargain hunters treasure.


“M&S' sales growth is overshadowed by margin decline. Our experts say they face significant challenges in cost inflation, lack of customer loyalty, and product range.”

“M&S may encounter greater difficulty in passing on cost increases compared to other grocers because there is already a perception that they have the second most expensive products after Waitrose.”

“Our experts say M&S's plan to open 30 new stores might require reconsideration, as the chosen locations don't appear to be optimal for food sales. Targeting mid-town or retail park markets would be a more suitable approach.”

Eleanor Simpson-Gould, GlobalData

“M&S’s revitalised business strategy is proving effective just one year in, with end of year results highlighting renewed sales and customer engagement across Food, Clothing & Home. However, investment into reshaping for growth brings growing pains for M&S.


"Reporting a profit before tax and adjusting items of £482m, down from £522.9m in 2021/22, a focus on supply chain modernisation, omnichannel growth and reshaping physical store presence amid turbulent economic conditions has unsurprisingly softened operating profits.

"With a guidance for modest growth in revenues for FY2024 M&S’s turnaround strategy is providing a steady footing for the year ahead and a return of dividends for shareholders.

"M&S’s reputation for innovation and quality helped deliver a successful year for both food sales and volumes, with LFL sales up by 5.4% and growth across all quarters. Responding to increasingly fierce competition within the UK grocery market to retain customer loyalty and offer value, M&S has sharpened prices on everyday value lines. Sales of ‘Remarksable value’ lines were up by 40%, and these lower prices will be key to build on FY2023’s improved transaction frequency and broaden the retailer’s appeal.

"At the same time M&S is right to continue to invest in its premium positioning. Differentiating more on product quality and range innovation will boost the retailer’s attractiveness to shoppers looking to dine in more as the price of meals out escalates. The roll out of M&S vibrant new food hall format provides a further reason to be optimistic about the retailer’s future."

Clive Black, Shore Capital

"M&S states that it has had a good start to FY24 with sales in C&H and Food up year-on-year. That said, headwinds persist that need to be countered including pressures on living standards, COGs and operating expenses inflation (e.g., energy at c£50m and labour at c£100m), and the impact of rising base rates in the UK.

"Accordingly, the Group guides to an expectation of 'modest' revenue growth from across the business whilst continuing to invest in product quality, trusted value and the rotation of its store estate offset by cost mitigation (c£150m), lower waste and stock loss.

"Reshaping continues with further development of the Food and C&H offer on an omnichannel basis whilst seeking to progressively improve the performance of ORL, a drag that will be a welcome removal. The store rotation programme also continues (target 180 full-line plus 100 new Food outlets [reducing C&H store space by c20% and increasing Food by 10-15%)], with FY24 being an exciting year with notable signature stores coming through e.g., White Rose, Leeds imminently."

© 2023 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: European Supermarket Magazine.

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