M&S cautious on 2024 outlook after first-half profit beats expectations
Versus September Six M&s Forecast Profit For Average Reported To £276m Of 30, The Analysts' Months Of £360m
Food and clothing retailer Marks & Spencer reported a much better-than-expected 75% rise in first-half profit and restored its dividend but cautioned the combination of high borrowing costs, erratic weather and geopolitical events may soon weigh on shoppers.
After more than a decade of failed turnaround efforts, M&S CEO Stuart Machin is seeking to build a more resilient business with a renewed focus on the quality and value of its clothing and food, heavy investment in technology and e-commerce, and a radical overhaul of its store estate.
Its shares have nearly doubled over the last year. They rose 7% in early trading on Wednesday.
The 139-year group, one of the best known names in British business, said its trading momentum had been maintained through October and it was planning for a good Christmas, with customers already responding positively to its ranges.
"However, as we enter 2024, we are not relying on the favourable recent market conditions persisting," it said.
It cautioned the economic outlook remained uncertain and flagged the impact on the consumer from the highest interest rates in 20 years, geopolitical events, and erratic weather.
"Therefore, against more challenging comparatives, we expect profit before tax and adjusting items to be weighted towards the first half, as we remain laser-focused on our long-term ambition to reshape M&S for future growth," it said.
Prior to the latest update analysts were on average forecasting a 2023/24 profit before tax and adjusting items of £574m (€659m), up from £482m in 2022/23.
M&S reported profit of £360m for the six months to September 30, versus analysts' average forecast of £276m.
Revenue rose 10.8% to £6bn as it won market share in both divisions. Food sales were up 14.7%, while clothing and home sales increased 5.7%.
As flagged in May, M&S restored its dividend with a 1 pence interim payout, its first since 2019/20.
- Reuters