Clothing retailer Marks and Spencer Group (LSE: MKS) beat market expectations with a sales increase of 2.8% to £4.3 billion in the first half and profits of £298.3 million against the predicted £285 million, mostly driven by the strong performance of its international business where revenues and profits from M&S’ 315 stores in 41 territories climbed 12.2% and 21.1% respectively.
M&S’ profits inched higher to £298.3 million from last year’s £297.8 million, reflecting the company’s progress in cost management. The company now projects cash benefits to reach £250 million per annum by 2015/16 with £175 million of it delivered over the next three years.
“Our strong customer offer, together with tight management of costs and margin, has allowed us to report a profit slightly ahead of last year, despite a challenging economic environment. We increased our share of the clothing market over the period, and our performance in food has also improved,” said Chairman of Marks & Spencer Stuart Rose.
M&S targeted areas of low market share with the launch of the Indigo line in womenswear and the re-launch of the North Coast line in menswear, also broadening its footwear and accessories ranges to “help customers refresh their wardrobe more economically,” adding that this autumn/winter season has been its best ever for boots with over 330,000 pairs sold.
Food sales were up 1.8% with the quarter also being the fourth consecutive quarter of improved like-for-like sales. The international business accounted for the increase as like-for-like food sale sin the UK slid 0.3%, while like for like general merchandise sales declined 1.4%.
The company reported a good start to the third quarter, yet said it was cautious about the outlook for Christmas and the year ahead as the market remained competitive.
Shares in Marks & Spencer rose 5.5% on the news.