These aren’t just good results…M&S buoyed by update
Marks and Spencers’ shares were back in fashion on the FTSE 250 yesterday, after a buoyant update indicated greener pastures for the once ailing brand.
The retailer boosted full year profit expectations as it reported a profit before tax of £187.3m in the six months to 2 October, sending shares up more than 16 per cent.
The results were “one of the first times I can remember in almost a decade” that the high street stalwart appeared to be on the up, said Edison Group analyst Neil Shah.
Food sales shot up 10.4 per cent while full-price clothing and homeware sales jumped 17.3 per cent.
Clothing has long held back M&S, and even collaborations with big names like Alexa Chung, David Gandy and Holly Willoughby had left it “unable to shake its out-dated fashion label,” according to Third Bridge’s Ross Hindle. And although overall clothing and homeware sales dipped one per cent, the tide looks to be turning, according to analysts and investors alike.
M&S boss Steve Rowe was keen to temper expectations. “Given the history of M&S we’ve been clear that we won’t over claim our progress,” he said yesterday.
“The hard yards of driving long term change are beginning to be borne out in our performance,” Rowe added.
Analysts said the sentiment left “room for surprise” when it would be ready to report its results covering the all-important Christmas period.
The brand was eager to quash concerns of empty shelves due to logistics shortages this Christmas. It said it was increasing “truck, cage and tray-fill”, as well as introducing targeted incentives for drivers.
Patience has long been a virtue for M&S investors, according to Chris Beauchamp, analyst at IG Group.
The brand has managed a “difficult transition” between online and physical stores, Beauchamp said. “There’s the sense we are looking at a different M&S overall.”
Analysts were hopeful dividends would make a return “in due course”. Beauchamp suggested a payout could be a “rabbit out of the hat they can pull later in the year.”