London — British retailer Marks & Spencer (M&S) reported a 58% rise in annual profit, ahead of market expectations, as its strategy to re-shape the business delivered strong sales growth in both its food and clothing divisions.
Shares in the 140-year old group, one of the biggest names in British business, were up 8% in early trading on Wednesday after it also said it was confident of further progress in its new financial year.
After two decades of failed turnaround efforts, M&S, under CEO Stuart Machin, is finally reaping the rewards of an expensive investment programme to improve the quality and value of its clothing and food, upgrade its technology and e-commerce operations, modernise its supply chain and radically overhaul its store estate.
M&S made profit before tax and adjusting items of £716.4m ($913m) in the year to March 30, ahead of analysts’ forecasts which ranged between £665m and £705m and the £453.3m made in 2022/23.
Sales rose 9.4% to £13.1bn, with food sales up 13.0% and clothing & home sales up 5.3%.
“Both businesses have now delivered 12 consecutive quarters of sales growth and this trading momentum gives us wind in our sails, and confidence that our plan is working,” said Machin.
M&S is targeting a 1% increase in market share in both the clothing & home and food divisions over the five years to 2027/28, with adjusted operating margins of more than 10% in clothing & home and over 4% in food.
It achieved the margin targets in its 2023/24 year, with 4.8% in food and 10.3% in clothing & home.
The most recent industry data showed M&S was Britain’s second-fastest growing store-based grocer after discounter Lidl.
“Given our track record of delivering volume growth, market share and free cash flow, we are confident that we will make further progress in 2024-25 and beyond,” M&S said.
Reuters
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