Marks & Spencer Raises Profit Outlook After Strong Trading
British retailer Marks & Spencer has revised its full-year profit outlook, indicating ongoing success in gaining a larger portion of the market in its clothing & home as well as food divisions.
The company has now projected an increase in profit growth for the entire 2023-24 fiscal year, a departure from its previous estimate of a slight decrease.
It anticipates that its interim results, set to be released in November, will demonstrate a “significant improvement” compared to earlier projections, with double-digit sales growth.
During the first 19 weeks of the year, M&S recorded notable growth in like-for-like food sales, which surged over 11%, while clothing & home sales also saw a rise of over 6% on the same basis.
In the realm of food, this period saw the retailer enhancing pricing on more than 80 product lines under the label of ‘Remarksable Value’.
On the clothing front, the boost in sales was primarily driven by robust in-store growth, whereas online sales experienced a more restrained increase.
The company highlighted that its sell-through rates were sturdy, leading to lower-than-expected stock clearance during sales.
In terms of operational margin, the company emphasized that it remained robust, primarily due to the strong performance of its physical stores.
The margin was further strengthened by the implementation of the store rotation and renewal initiative.
However, the retailer did express some caution, acknowledging the prevailing uncertainties concerning the economic outlook.
It acknowledged the potential for the consumer market to tighten as the year unfolds.
Charlie Huggins, an analyst at Wealth Club, provided insights into the company’s performance, noting that M&S, following Next’s recent profit upgrade, is now also expecting higher-than-anticipated profits for the year.
This indicates that despite discouraging economic reports, the UK consumer is still displaying Marks & Spencer spending activity.
Huggins also commended the company’s progress in executing its strategy introduced the previous year, aimed at enhancing brand perception and designs, curbing discounting, and improving online offerings while simultaneously reducing costs and fostering a more entrepreneurial culture.
The positive trading update implies that consumers are responding well to this strategy, leading to Marks & Spencer continuous expansion of its market presence in clothing and home sectors.
Although M&S acknowledged the prevailing uncertainties in the economic environment, there’s a growing sense of optimism based on recent developments.