M&S shares soar on earnings growth as consumers prove resilient
- Food sales increased 11% and clothing and home sales increased 6% in the first 19 weeks of 2023
- The retailer expects a “significant improvement from previous expectations
Shares of Marks & Spencer soared on Tuesday after the retailer said a better-than-expected first half should lead to profit growth this year.
In a business update, M&S told investors that comparable food sales growth of 11 percent, and apparel and home sales growth of 6 percent, are forecast for the first 19 weeks of 2023. will drive a “significant improvement over the old one.” Expectations’.
It’s an update to earlier guidance for a full-year profit slide and marks progress on M&S’s plans to ‘reform’ the business under its ongoing recovery strategy.
Marks & Spencer Stock they were up 8.6 percent at 222.2 pence in early trading on Tuesday.
M&S says it expects earnings growth for this year
M&S said: ‘Overall, group operating margin has remained strong, driven by strong store performance and enhanced by our store rotation and renovation programme.
‘Significant uncertainties remain about the economic outlook, and there is a risk that the consumer market will tighten as the year progresses.
“However, we now expect the full-year result to show earnings growth in 2022-23, with interim results to show significant improvement versus earlier expectations.”
The brief update also said that M&S had continued to invest in “reliable quality and value,” and that the company was “raising prices” on some of its products.
Inflation hurt M&S’s profits last year, particularly pressures from food and labor costs, but recent price-cutting efforts suggest the retailer is starting to see these problems ease.
Susannah Streeter, of Hargreaves Lansdown: said: ‘[Marks and Spencer]…is seen as an indicator of consumer confidence and, by raising its earnings outlook, shows how much more resilient buyers are proving to be despite the continued storm of inflation and higher interest rates.’
M&S Chairman Archie Norman last month signaled concern that the restructuring plan for the company, which has seen dozens of larger sites close in a review of its store portfolio, was taking “too long”.
Norman also said the state of the High Street retailer was “fragile” and that it “could go backwards” if executives diverted attention.
And last month, M&S found itself in a spat over shareholder democracy with some investors expressing frustration over its new digital-only AGM policy.
But M&S shareholders are also riding a wave of rising value, with shares rising to a 15-month high in May when they posted strong results.
Charlie Huggins, Quality Shares Portfolio Manager at Wealth Club, said: ‘[Today’s] The results also testify to the group’s progress against its strategy, launched last year.
“This is aimed at improving awareness of the brand and designs, reducing discounts and improving the online offering, while also reducing costs and instilling a more entrepreneurial culture.
“Today’s trade update suggests this plan is resonating with consumers with M&S continuing to increase its market share in apparel and homeware.”