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

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

Marks & Spencer has reported a 9.4% increase in group sales in its 2023/24 financial year, with sales in its Food division rising by 13.0%, and Clothing & Home up 5.3%.

"We have a clear plan, a clear vision for the future, and there is so much opportunity ahead of us," commented Stuart Machin, chief executive. "We are at the beginnings of a new M&S.”

Here's how industry analysts from Wealth Club, Shore Capital, GlobalData and AJ Bell viewed its performance.

Charlie Huggins, Wealth Club

"M&S has had an excellent year and there is now enough evidence to suggest this isn't a flash in the pan. Sales have grown strongly, with 12 consecutive quarters of growth for Food and Clothing and Home. Profit margins have also risen nicely as a result of greater efficiency, and cash flow has been strong, enabling M&S to return to the dividend register.

"The most impressive thing about the M&S turnaround story so far has been the market share gains, in both Clothing and Food. They have been able to achieve this while reducing discounts, which is a good sign. In other words, they aren’t just slashing prices in the hope of getting quick sales growth. They have been focused on reinvigorating branding and designs, which ought to be more sustainable.


"All-in-all, M&S’ execution has been impressive in a difficult retail environment. Encouragingly, it sounds like there are plenty more self-help initiatives to go for, to keep this momentum going.

"The only fly in the ointment is that investor expectations have now been reset to a higher level. This means the pressure on M&S to keep delivering has increased, and any slip ups are likely to be harshly punished."

Clive Black, Shore Capital

"Following the publication of its FY24A results and our reflection upon FY25F forecasts and upgrades, the Group’s equity trades on an FY25F PER of just 10.6x, an EV/sales ratio of 0.55x and an EV/EBITDA multiple of only 5.2x, noting as we do the structural improvement in the composition of the Group’s EV on a non-lease basis, i.e., net cash!

"M&S’ shares are estimated to offer an FY25F dividend yield of 1.6%, so as outlined above, not an income play at this time, funded from a FCF yield of 6.2%. For FY26F, on our PBT forecast of £801m, the stock trades on a PER of 9.8x, an EV/EBITDA of only 4.8x; this latter figure is way too low for us.


"As we have argued for some years, delivery of sequential earnings growth creates the basis for us to credibly argue for a re-rating of M&S’s equity valuations, a journey that the firm is now on, which we welcome. Ongoing expedition of the Board’s plan should drive that rating ceiling all the higher, which could be a very rewarding medium-to-long-term journey for current and new shareholders. As such, we are praiseworthy and very pleased for Chair, Archie Norman, CEO, Stuart Machin, and their team, that M&S has engineered such an exciting and uplifting position."

Russ Mould, AJ Bell

“As Marks & Spencer knows from first-hand experience, corporate turnarounds are tricky to achieve and even harder to sustain. There tend to be some quick wins, but changing the culture is harder than climbing Mount Everest and it’s easy for businesses to slip into old habits, often to their detriment.

“Judging by Marks & Spencer’s latest results, it might be one of the select few companies to achieve permanent change. The turnaround story has been years in the making and it finally looks like the retailer has cracked it.

“Food products are flying off the shelves and it’s at long last struck at chord with shoppers on the clothing side. Improved free cash flow has helped to strengthen the balance sheet, bring back dividends for shareholders, and provide options to accelerate investment in the business.


“In an environment where so many retailers are struggling, Marks & Spencer has snatched the crown from Next and become the shopkeeper which others aspire to be. It’s back on top and 12 consecutive quarters of sales growth cements its new-found status as the UK’s retail champion.

“Despite this positive situation, there is still a lot more to do. The Ocado joint venture needs to pull its socks up and the international operations aren’t as strong as they once were. By its own admission, Marks & Spencer needs to move faster with efforts to offer a more personalised service. Fortunately, having the core business do well means it can afford to take a bit longer to fix the other bits.”

Eleanor Simpson-Gould, GlobalData

“Marks & Spencer has performed well this year, not by engaging in aggressive pricing schemes in response to competition from discounters, a challenge that has beset the top three grocers, but by remaining steadfast to its brand identity as a purveyor of premium and consistently high-quality products.

"To ensure Marks & Spencer secures a wider appeal in future range and product launches, the retailer must heed its customers’ frequent demands for more vegetarian and vegan products to ensure dining-in options are suitable for the whole family.


“Central to Marks & Spencer's strategy to rejuvenate its brand perception among consumers is its comprehensive store renewal program. As part of its commitment to expanding the food division, the retailer opened six new food halls and completed the renewal of eight standalone food stores in the concluding financial year. Additionally, Marks & Spencer has pledged to open nine new stores this year, alongside the continuous refurbishment of its existing store portfolio.

"The retailer reports that of the renewals completed in FY2022/23, sales increased by 14% owing to favourable customer footfall and basket size improvements. With online sales surpassing those in the physical channels for the Clothing & Home segments, rising 7.8% versus a more modest 4.1% instore sales growth, Marks & Spencer must prioritise an integrated omnichannel approach to ensure that the expansion of its physical store network complements, rather than detracts from, its overall sales performance.”

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