M&S raises profit outlook following robust customer spending

Retailer has benefited from its focus on providing high-quality food and well-priced fashion ranges

M&S said it has seen food sales grow 11% during the first 19 weeks of the year with clothing and home sales growing 6%. Picture: Damian Coleman

British retailer Marks & Spencers (M&S) raised its profit outlook, saying demand in stores had helped it to win new customers for its clothing, home and food businesses.

The 139-year-old group, whose shares have risen 66% so far this year, said it now expected profit growth in its full 2023-24 year, having previously forecasted a small decline. Its shares jumped 8%.

Like other major British retailers, M&S has benefited from robust consumer spending despite a cost-of-living crisis that has entered its second year. 

But the high-street stalwart has also benefited from its focus on providing high-quality food, which has helped to win over shoppers who are less keen to dine out, and well-priced fashion ranges that are refreshed more regularly.

The unexpected statement, which promised "a significant improvement" against previous expectations when it published interim results in November, helped to raise the share prices of other retailers, including Next and the owner of Primark.

M&S said in the first 19 weeks of the year, like-for-like food sales grew over 11%, while clothing and home sales were up over 6% on the same basis. Group operating margin "continued to be robust".

It did warn, however, that considerable uncertainties about the economic outlook remained, and there was a risk the consumer market would tighten as the year progressed.

Under CEO Stuart Machin, M&S is seeking to build a more resilient business with a 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.

Once the destination for most British households to buy school uniforms, bedding, food and underwear, M&S has for years struggled to win over younger, fashion-conscious customers while retaining its reputation for high-quality basics such as jumpers that are demanded by its older clientele.

But investments in the speed at which it can deliver new fashion ranges has won plaudits in the fashion press, helping a retailer that has a presence on most British shopping streets to regain a sense of style.

Investments to lower the price of certain food items, while also still offering high-quality wine and meal deals for those shoppers looking to stay at home more, has also boosted sales.

• Reuters