Marks & Spencer has reported a much better-than-expected 75% rise in first-half profit and restored its dividend but cautioned the combination of high borrowing costs, erratic weather and geopolitical events may soon weigh on shoppers.
After more than a decade of failed turnaround efforts, M&S' chief executive Stuart Machin is seeking to build a more resilient business with a renewed focus on the quality and value of its clothing and food, heavy investment in technology and e-commerce, and a radical overhaul of its store estate.
Its shares have nearly doubled over the last year. They rose 7% in early trading on Wednesday.
“Our strategy to reshape M&S for growth has delivered strong results in the first half," said Machin. "We have maintained our relentless focus on trusted value, giving our customers exceptional quality product at the best possible price."
The 139-year group, one of the best known names in British business, said its trading momentum had been maintained through October and it was planning for a good Christmas, with customers already responding positively to its ranges.
'However, as we enter 2024, we are not relying on the favourable recent market conditions persisting,' the group said.
It cautioned the economic outlook remained uncertain and flagged the impact on the consumer from the highest interest rates in 20 years, geopolitical events, and erratic weather.
'Therefore, against more challenging comparatives, we expect profit before tax and adjusting items to be weighted towards the first half, as we remain laser-focused on our long-term ambition to reshape M&S for future growth,' it said.
Prior to Wednesday's update analysts were on average forecasting a 2023/24 profit before tax and adjusting items of £574 million (€659.7 million), up from £482 million (€553.7 million).
M&S reported profit of £360.2 million (€414 million) for the six months to Sept. 30, versus analysts' average forecast of £276 million.
Revenue rose 10.8% to £6.13 billion (€7.05 billion) as it won market share in both divisions. Food sales were up 14.7%, while clothing & home sales increased 5.7%.
As flagged in May, M&S restored its dividend with a 1 pence interim payout, its first since 2019/20.
Additional reporting by ESM