Marks & Spencer profits rise as clothing stores reopen after lockdown
Marks & Spencer Group Plc surged after raising its profit forecast on strong food and clothing sales at stores that reopened after months of lockdowns earlier in the year.
The UK home-based retailer said it expects profit to be above the upper limit of previous forecasts of £ 300million to £ 350million ($ 409million to $ 477million).
Shares rose nearly 10% to 156.8 pence in London on Friday morning.
The bullish outlook comes after food incomes rose nearly 11% in the 19 weeks to August 14, compared to the corresponding period last year. Strong sales of food products have also increased by almost 10% compared to the same period in 2019 before the pandemic.
Likewise, the long-suffering clothing and home division of the retailer recorded revenue up 92.2% from a year ago, when stores were closed, and down just 2.6%. from 2019 levels. International revenues are also on the rise.
A promising sign for the retailer, he said that while part of the increase in sales was the result of pent-up demand, overall he believes the improved performance is the result of his turnaround program.
A household name in Britain, M&S has been trying to restructure and improve its performance for at least a decade. Profitability has been declining for years, penalized by developments in the competitive UK market. Various management teams have attempted to turn the business around, with the current effort being led by CEO Steve Rowe.
The increase in forecasts at M&S is the result of a “disciplined approach to its clothing assortment” that increases margins, with online sales increasing as part of the total, Bloomberg Intelligence analyst Charles Allen said.
“This is a first step for M&S after years of struggling to regain its historic connection to consumers, but the new online model may retain its appeal,” he said.