Marks and Spencer reported an increase in sales and profits, sending shares up nearly 12 per cent on Wednesday and cementing their place as the UK’s best-performing retail stock last year as its turnaround picks up momentum.
The 139-year-old retailer, which has promised recovery to investors and customers for more than two decades, said sales rose 9.9 per cent to nearly 12 billion pounds in the year to April 1. From £391.7m.
M&S plans to return a modest dividend to shareholders starting in November after it suspended payments at the start of the pandemic to protect its balance sheet.
The group’s shares rose 11.7 percent to 182 pence in morning trading. The stock is up 46 percent in the past year, the most of any FTSE 250 retailer, and more than any other FTSE 100 retailer according to Bloomberg data.
CEO Stuart Machen, who succeeded Steve Rowe a year ago, hailed the “continued trading momentum” across the company, adding that the food has outperformed the market “with customers perceiving the highest quality and value in six years.”
Food sales rose 8.7 percent to 7.22 billion pounds, ahead of the consensus, while clothing and homes also performed 11.5 percent to 3.72 billion pounds, beating analysts’ expectations.
However, the company warned that the economic outlook for consumer spending remains uncertain amid persistently high inflation. It had projected modest revenue growth and a slight decline in profits for this fiscal year.
Richard Chamberlain, retail analyst at RBC Capital Markets, said M&S was making progress in its food business, “helped by improved value-for-money perception, range development and its joint venture with Ocado Retail,” but cautioned that the division was relatively labor and energy-intensive.
“M&S apparel and international companies have benefited from better presentation and execution recently,” he added.
