M&S sees gross sales and income balloon

Marks & Spencer sales surged 9.4 per cent to £13.1billion last year, thanks to bumper growth across the retailer’s food and clothing lines. 

The high street icon posted adjusted operating profit growth of 33.8 per cent to £838.6million for the year to 30 March, after food and clothing sales jumped 13 and 5.3 per cent respectively. 

Bolstered by the sizeable bottom line boost, M&S restored a 3p per share dividend on Wednesday. 

The 140-year old retailer, one of the biggest names in British business, also said on Wednesday it was confident of further progress in its new financial year. 

‘We are at the beginning of a new M&S’, chief executive Stuart Machin said. 

‘We are at the beginning of a new M&S’, chief executive Stuart Machin said 

M&S also told investors it is plotting ‘a more productive estate’, which will see it eventually close ‘legacy stores that are more expensive to operate and do not demonstrate the M&S brand of today’.

It added: ‘Rotation towards a target estate of 180 full line and 420 Food stores provides significant opportunity to invest and grow in the years ahead.

‘We continue to seek new sites, to enable us to accelerate store closures and create an estate we are proud of by 2027/28.’ 

After two decades of failed turnaround efforts, M&S is finally reaping the rewards of an expensive investment programme to improve the quality and value of its clothing and food, upgrade its technology and e-commerce operations, and radically overhaul its store estate.

M&S shares rose 7.89 per cent or 21.60p to 295.40p on Wednesday morning, having surged over 80 per cent in the last year.  

The group said: ‘Given our track record of delivering volume growth, market share and free cash flow we are confident that we will make further progress in 2024/25 and beyond.’

M&S made an adjusted pre-tax profit for the year to 30 March of £716.4million, which was ahead of analysts’ forecasts which ranged from between £665million to £705million. In the previous year, the group’s adjusted annual pre-tax profit reached £453.3million. 

The group said its website was ‘accelerating growth, attracting new customers, and increasing profitability’.

Improved cash flow of £414million helped drive ‘further balance sheet improvement and net funds position at year end’, M&S added.

Upbeat: M&S said it was confident of further progress in its new financial year 

Machin said: ‘Two years into our plan to Reshape for Growth we can see the beginnings of a new M&S. 

‘We have made progress on “hardwiring” sustainable change – how and when we execute our strategic priorities – with progress in store rotation and supply chain. 

‘However, we need to move faster and be ruthlessly challenging on the areas where progress has been slower, building a more effective digital and technology infrastructure, accelerating the move to a truly personalised customer experience, and resetting priorities in International.

‘We have a clear plan, a clear vision for the future, and there is so much opportunity ahead of us.’

The group also outlined plans to bolster its online operations, which it hopes to grow from 22 per cent of clothing and home sales five years ago to 50 per cent of sales.

It said: ‘Online growth has increased, supported by better product and more effective marketing. Despite this, profitability is not yet market leading despite our scale advantage.’

Boost: M&S announced a new 3p per share dividend on Wednesday

Charlie Huggins, manager of the Quality Shares Portfolio at Wealth Club, said: ‘M&S has had an excellent year and there is now enough evidence to suggest this isn’t a flash in the pan.

‘The most impressive thing about the M&S turnaround story so far has been the market share gains, in both Clothing and Food. They have been able to achieve this while reducing discounts, which is a good sign.’ 

Mark Crouch, analyst at eToro, added: ‘In what has become one of the most emphatic turnarounds seen in British retail in recent years, the M&S comeback story is turning into something of a fairytale for investors. 

‘Shares are up over 50 per cent in the last twelve months as the business maintains the trend of attracting new customers and accelerating growth.

‘Despite inflationary pressures easing, retailers remain fully engrossed in a tug of war for market share, one where quality and value are proving to be key battlegrounds. 

‘M&S, renowned for their quality, has applied focus to offering customers significant value along with it and it seems to be working.’

Russel Pointon, director of consumer at Edison Group, said: ‘Challenges remain in the Ocado Retail Joint Venture and international segments, where adjustments are likely needed due to a decline in sales and increased losses.’