Marks & Spencer hails momentum in turnaround strategy as sales jump

Bosses at M&S hailed the performance as providing evidence of progress from the retailer’s turnaround plan, which has seen it shut dozens of its larger stores amid an overhaul of its store portfolio.

Total revenues for the business grew by 9.6 per cent to £11.9bn, compared with the previous year.

Clothing and home sales lifted by 11.5 per cent to £3.72bn, after a significant rise in store sales, with shoppers flocking back to the high street after the impact of Covid-19.

Meanwhile, sales in its food operation grew by 8.7 per cent to £7.22bn, against the year prior.

M&S also told shareholders it has witnessed a “good start” to the new financial year, despite an “uncertain” outlook for consumer spending.

Nevertheless, the London-listed company posted a profit before tax and adjusting items of £482m for the year, down from £522.9m last year.

The retailer said the figure, which was above analyst predictions, was partly lower due to the loss of pandemic-era business rates relief from the government.

It also highlighted continued cost inflation for both clothing and food divisions. The company said it also expects to face over £50m of energy cost rises and over £100m in staff pay increases over the coming year, but highlighted plans to offset this by its cost-cutting plan designed to secure a further £150m a year.

Stuart Machin, the company’s chief executive said: "One year in, our strategy to reshape M&S for growth has driven sustained trading momentum, with both businesses continuing to grow sales and market share.

"Our Food and Clothing and Home businesses invested in value to protect customers from the full force of inflation which, whilst impacting margin, was the right thing to do, as serving our customers well is the only route to delivering for our shareholders.

“Food outperformed the market, with customer perception for quality and value the highest in six years. The benefits of the Gist acquisition and operational efficiencies also supported an improved performance in the second half. Clothing and Home retained market-leading value perception, and its style credentials continue to improve.

"Sales were up in store and online, supported by growth in Click and Collect sales, active App users and Sparks loyalty membership; demonstrating the emerging power of our omni-channel model.

"The store rotation and renewal programme delivered strong sales uplifts and will accelerate this year, including the opening of five brand defining full-line stores in major cities.”

Charlie Huggins, Manager of the Quality Shares Portfolio at Wealth Club, commented: "In a difficult trading environment M&S has delivered solid results, with notable progress in Clothing and Home. With the new year having got off to a good start and plans to reinstate dividends, the turnaround plan to revitalise the brand and reignite growth appears on track.”