Marks and Spencer Group PLC (LSE:MKS) rose 8% to around a six-year higher after its profits beat forecasts, with analysts hailing the significant strategic progress.
Pretax earnings were £716 million, up 58% year-over-year. The group declared a final dividend of 2p, making for a full-year payout of 3p after profits and cash flow jumped.
Forward guidance about the new financial year was limited to management expressing confidence in making "further progress in FY25 and beyond" towards the mid-term targets of at least 4% margin in food and 10% in clothing, as well as gaining more market share.
Deutsche Bank analysts said profit forecasts would be likely to be raised in-line as a result.
With the shares trading for around 11 times forecast earnings, they "see scope for both a re-rating given increasing confidence and an earnings upgrade".
Peel Hunt's Jonathan Pritchard said it was a "small beat" at the pre-tax profit level though the results "showcased an exceptional year for the business, with significant strategic progress made".
The profit beat was primarily driven by a very strong food performance, he said, as like-for-like (LFL) sales accelerated in the fourth quarter from 10% to 12%, and the margin performance was "pleasing, already ahead of the mid-term targets".
Clothing & Home saw LFL also pick up from 4.8% to 5.1%, "but profit was slightly below our estimate".
"International was the only area of concern, but Ocado losses were better than we expected."
While M&S did not offer a current trading statement, Pritchard said the beat on profits "makes it clear to us that forecasts will increase today, by c.5%".
Clive Black at house broker Shore Capital said management had guided to "further progress" and while "we cannot expect a re-run of the exceptional progress achieved in the financial year 2024" he felt that M&S "may beat our materially upgraded estimate but the magnitude of that beat to our numbers and consensus is considerable".
Accordingly, he anticipates a more normally balanced first and second half split, with costs remaining in the system be from the UK National Living Wage and business rates or ongoing pass-through from the food supply chain, "which implies disinflation rather than deflation".
Shore Cap forecasts adjusted profit of £755 million and EPS of 25.7p, upgraded 12% from previous estimates, with circa £801 million pencilled in for 2026.