British retailer Marks & Spencer performed ahead of forecasts for first-half profit and raised its full-year outlook, adding to evidence that its latest attempt at an elusive turnaround is delivering.
The retailer said it made profit before tax and adjusting items of £269.4 million (€315.6 million) in the six months to October 2, compared to analyst forecasts of between £205 million and £264 million pounds.
It made a loss before tax and adjusting items of £17.4 million (€20.4 million) in the same period last year.
Raising Profit Forecast
M&S, which recently rolled out a new opticians service, raised its forecast for full-year profit before tax and adjusting items to about £500 million (€585.7 million), up from from previous guidance of over £350 million.
The profit upgrade is only the second from M&S this century and follows one in August.
The first-half outcome was also ahead of the profit of £176.3 million made in 2019, before the COVID-19 pandemic impacted trading.
Food Sales Up By Double Digits
Food sales increased 10.4% on 2019, while clothing and home revenue was down 1%, with full price sales up 17.3%.
M&S believes the pandemic has masked the progress management has made in its latest turnaround efforts after years of false dawns.
Chairman Archie Norman and CEO Steve Rowe have focused on transforming M&S' outdated culture, improving the quality and value of its clothing and food products, while reshaping its store estate and investing in technology and e-commerce, including a venture with online supermarket Ocado.
'Unpacking The Numbers'
“Given the history of M&S we’ve been clear that we won’t overclaim our progress," Rowe commented. "Unpacking the numbers isn’t a linear exercise and we’ve called out the COVID bounce back tailwinds, as well as the headwinds from the pandemic, supply chain and Brexit, some of which will continue into next year.
"But, thanks to the hard work of our colleagues, it is clear that underlying performance is improving, with our main businesses making important gains in market share and customer perception. The hard yards of driving long term change are beginning to be borne out in our performance.”
Shares in M&S, up 43% so far this year, closed Tuesday at 194.5 pence, valuing the business at £3.8 billion.
M&S recently pledged to become a carbon-neutral business by 2040, ten years ahead of a UK government target.