Shares in Marks & Spencer have surged after it bumped up its profit outlook following “encouraging” sales – but admitted stores are still struggling to recover after lockdowns.

The retailer pointed to clothing and home sales – increasingly made online – bouncing back to just below pre-pandemic levels as well as a big boost to food revenues as evidence that its turnaround plan was working.

M&S said the trading performance was likely to reflect pent-up demand and cautioned that “substantial uncertainty” over consumer demand remained while supply chain disruption was putting pressure on costs.

Please use Chrome browser for a more accessible video player

Cuts announced at M&S will not be the last

“However, assuming no further COVID-related restrictions on trading, at this early stage we expect adjusted profit before tax for the year to be above the upper end of previous guidance of £300-350m,” the retailer said.

Shares rose by as much as 12% following the unscheduled trading update for the 19 weeks to 14 August.

M&S said: “At the start of the year, continued restrictions across large parts of the M&S store portfolio meant that the trading outlook was highly uncertain.

More on Marks And Spencer

“Since then, M&S has seen an encouraging performance providing confirmation that the transformation programme is on track.”

The profits upgrade provided a rare shaft of optimism for the 137-year-old retailer’s shareholders after years of struggle to arrest its decline and a relegation in 2019 from the FTSE 100.

In its clothing and home division, M&S said it had seen a good recovery with revenue up 92.2% up on a year earlier and just 2.6% below pre-pandemic levels.

Chicken is displayed at an M&S food hall in northwest London July 8, 2014
Image:
M&S said cost-cutting was helping to mitigate the impact of supply chain disruption in its food division

But there was a stark divide between the performance of stores – where sales were 19.8% lower than in 2019 reflecting the fact that “many locations remain in slow recovery from the pandemic” – and online – where they were 61.8% higher and now comprise 35% of all clothing and home revenues.

In May, M&S revealed that it was stepping up store closure plans as it reported a £201m pre-tax loss for the year to 27 March as a result of the pandemic.

The latest update showed food sales up by 10.8% on last year and 9.6% ahead of 2019.

M&S said cost-cutting was helping to mitigate the impact of supply chain disruption as well as increased staff absences – without saying whether this was down to self-isolation alerts.

International revenue was up 39.7% on last year and 5.2% down on pre-pandemic levels despite the impact of lockdowns in India and Brexit-related supply disruptions to Ireland and France – the latter an issue recently raised by chairman Archie Norman in a strongly-worded letter to the prime minister.

Earlier this week, M&S revealed that it has made its products available in over 150 countries for the first time via British Corner Shop, an online supermarket for expats.

Business

Products You May Like

Articles You May Like

New Attack Let Attacker Collect and Spoof Browser’s Digital Fingerprints
LISTEN: Pistol Annies Get Flirty in ‘Come On Christmas Time’
Back From The Brink: How Crippling IATSE Strike Was Averted (For Now)
Hisense Launches 3 New Full-Array QLED TVs in India, Prices Start at Rs. 59,990
Smerconish: This is why it’s time to cancel ‘cancel culture’

Leave a Reply

Your email address will not be published. Required fields are marked *