M&S shares soar as profits from food and online sales rise
M&S shares soar 15% as food and online sales boost profits, but retailer warns of rising costs in coming months
- Retailer Shares Rise More Than 16% Thanks to Booming Profits
- Marks & Spencer’s annual profit forecast dropped from Â£ 350million to Â£ 500million
- Food Sales Up 10.4% From 2019 Levels As M&S Gets Market Share
Marks & Spencer’s shares climbed 15% today after its first-half profits beat expectations.
Profits before taxes and adjustments soared 52.8% from pre-pandemic levels to Â£ 269.4million, against analysts’ expectations of Â£ 205million to Â£ 264million sterling. This sent the action of the FTSE 100 up from almost 30p to 223.7p.
The retailer’s performance in the six months to October 2 represented a significant turnaround from losses of Â£ 17.4million in the same period last year, with M&S raising its full-year profit forecast by Â£ 350million to Â£ 500million.
Food sales increased 10.4% as M&S continued to gain market share over rivals grocers
However, M&S told investors on Wednesday that it expects increased costs to weigh on performance amid “supply chain pressure …
Food sales were up 10.4% from 2019 levels, as market share increased over the period, offsetting a 1% drop in clothing and home revenues, with full-price sales up 17.3%.
The Mail on Sunday last month revealed closely watched industry data, which showed M&S was drawing customers away from nearly all of its major supermarket rivals with market share taken out of most other major grocers.
Steve Rowe, Managing Director of M&S: âUnderlying performance is improving, with our core businesses making significant gains in terms of market share and customer perceptionâ
The decline in apparel and home sales reflected a 17.6% drop in in-store sales, with online sales rising 60.8% and now accounting for 34.4% of total sales for the category.
Global revenue increased 5% from pre-pandemic levels to Â£ 5.1 billion
The retailer also saw a 22.8% drop in net debt from 2019, with earnings per share rising 28.1% to 8.2p.
Going forward, M&S said it expects strong demand based on a more favorable economic outlook and âimproved customer perceptionâ to be âsustained in the near termâ.
However, he highlighted “well-publicized cost pressures”, which he expects “to become progressively steeper”.
He added that he would focus his efforts on his “productivity plans, store turnover and technology investments” to overcome these problems.
Managing Director Steve Rowe said: âGiven the history of M&S, we have made it clear that we are not claiming our progress.
âUnwrapping the numbers is not a linear exercise and we have called the tailwinds of the Covid rebound, as well as the headwinds of the pandemic, supply chain and Brexit, some of which will continue into next year. .
âBut, thanks to the hard work of our colleagues, it is clear that the underlying performance is improving, with our core businesses making significant gains in terms of market share and customer perception.
âThe hard yards of long-term change are starting to show in our performance. “
M&S shares rose more than 16% early in the session to 226.5p, bringing the year-to-date performance to 69.3%.
Freetrade analyst Gemma Boothroyd said M&S is well positioned to handle rising costs in the coming months.
She explained, âInvestors will be keeping their fingers crossed. M&S manages to leverage its pricing power to weather the supply chain storms that continue to collapse this year.
âSince M & S’s food is already priced higher, its buyers are probably less price sensitive to incremental changes anyway. âInvestors probably don’t need to sound the alarm on what’s to come as prices rise to keep up with inflation. Yet M&S ââneeds to do more than produce more Colin the Caterpillar cakes to bring back the buyers in its stores.