Marks & Spencer notches up better-than-expected jump in half-year profits

Like-for-like sales rose 7.5 per cent across its food business and increased 5.3 per cent in its clothing and home division, after a bounce back in demand for fashion ranges in the second quarter thanks to more seasonal weather.

Group chief executive Stuart Machin said the long-term impact of recent measures announced in the Budget was “for now uncertain”.

M&S added that an “uncertain” consumer backdrop and cost pressures would continue into its second half.

It said: “During the first half of the year, cost inflation has continued to be elevated, running well ahead of price inflation and the consumer environment has been uncertain.

“Despite this, the business has traded well, growing volume and value market share.

“As we enter the second half, we expect this backdrop to persist.”

But it said trading was on track in the first five weeks of its second half and that it was “confident of making further progress in the remainder of the year”.

The firm’s figures showed that on a statutory basis, pre-tax profits rose by 20.4 per cent to £391.9m over the first half.

Shares lifted 3 per cent after the figures.

However, the results showed the impact of soaring cost pressures, with the firm’s wages bill up 10 per cent after retailers were hit hard by the increase in the minimum wage earlier this year.

M&S said cost actions have driven savings of around £60m in the half-year, which it said “largely” offset inflation.

Mr Machin said it was a strong result, but said there was “much to do”.

He said: “The easy thing to do today would simply be to say that these are good results, but that wouldn’t be the right thing to do.

“In the spirit of being positively dissatisfied, we have so much to do over this year and beyond.

“Despite our strong trading momentum, there is much more opportunity for future growth and that energises us.”

The company has been pressing ahead with a revamp plan in recent years, led by Mr Machin, including heavy cost-cutting and store closures, after previous attempts to regain its former glory fell short of the mark.

In May, it declared that the group was in its strongest financial health for nearly 30 years and was seeing the “the beginnings of a new M&S” as it posted a 58 per cent surge in annual profits.

Richard Hunter, Head of Markets at interactive investor, commented: “These results clearly demonstrate why M&S is so strongly back in fashion with customers and investors alike.

“Perhaps the most striking element of the group’s transformation is in the Clothing & Home unit, which currently accounts for 31 per cent of group sales and now over half of group adjusted operating profit, where a number of £242.2m represented an increase from the previous year.

"Sales grew by 4.7 per cent, underpinned by a healthy margin of 12 per cent. Its offering is clearly appealing to the new target market of the “modern mainstream customer” as the company attempts to throw off the shackles of a previously dowdy and tired image. Indeed, M&S reports that “style perception continued to improve” over the latest quarter, with womenswear being a standout performer.”