Marks and Spencer Group PLC (LSE:MKS) shareholders will be waiting with bated breath after a buoyant update in August suggested a strong trading outlook for the current fiscal year.
The retailer told the market that it was expecting annual “profit growth” compared to 2022-2023, and “significant improvement” above expectations for its interim results that are due to be announced next week.
A year ago, M&S announced ‘M&S Reshaped’, a cost-cutting and investment plan that eyed up to £400 million of underlying cost savings and value in its clothing, home and food segments.
Marks & Spencer is due to release its interim results on Wednesday 8 November for the 26 weeks ending on 30 September, and the savvy investor will be looking at its online sales figures as well as what shape its profits are in.
In August, the same month its return to the FTSE 100 was confirmed, the retailer said that it had seen “continued market share growth” in its clothing and home and food businesses alike, reporting “good progress” on its programme to ‘reshape’ the business.
Food sales grew by more than 11% in the first 19 weeks (nearly five months) of the reporting period, it said, after it sharpened prices on more than 80 ‘Remarksable’ value lines.
Clothing sales rose by more than 6% during those initial months, following “strong growth” in stores, despite, perhaps crucially, “subdued” online sales growth.
M&S’s chairman Archie Norman said in the retailer’s annual report for 2023, which set a goal for half of all of the company's clothing and home products to be ordered online and for its profit margin for online sales to exceed in-store profits: “Our objective is to grow online.”
While the retailer said in August that in the early part of the financial year, in-store sales rates were robust with less than planned stock going into sales, it warned “considerable uncertainties remain” with a risk that the consumer market will “tighten” as the year progresses.
For the first half of the year, Barclays forecast sales up 11% to £6.2 billion and pre-tax profit up 34% of £275 million.
"We expect recent sales to have been impacted by the weather, but there is time left for lost sales to be recouped," analysts said, adding that they also will be looking for more "colour" from management on the integration of last year's Gist acquistion, store estate work and online profitability.