Marks & Spencer is expected to report its first rise in annual profit in four years next week, fuelling hopes that it has finally rediscovered a successful formula.
Shares in M&S, one of Britain’s best known high street shopping chains, have risen by a third over the last nine months, hitting a seven-year high last month ahead of the earnings on May 20.
The increase reflects hopes that the billions of pounds chief executive Marc Bolland has spent on the redesign of products, stores, logistics and its website is paying off and addressing decades of under-investment in the 131-year-old firm.
Analysts expect M&S to report profit before tax and one-off items of £625m-£664m with a consensus of £648m in the year to March 28.
That’s 4 per cent ahead of the £623m made in 2013-14 but for the second year running would be less than the annual profit made by clothing rival Next.
Bolland, in the job since 2010, has focused on boosting profit margins, guiding to a rise in the 2014-15 gross margin for general merchandise – spanning clothing, footwear and homewares – of between 150 and 200 basis points.
That would be a reward for having sourced more goods directly from suppliers, spent less on promotions and concentrated more on full-price sales.
An increase in the food gross margin of 10-30 basis points was also targeted.