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M&S posts second profits upgrade in three months

M&S turns the corner: Beleaguered store posts second profits upgrade in three months as its boss says ‘it’s nice to be making some money for once’

  • Archie Norman, 67, overseeing restructuring of group alongside chief executive
  • Chairman was speaking as retailer yesterday beat forecasts for first-half profit
  • Marks & Spencer also upgraded its earnings outlook for second time this year

Marks & Spencer’s chairman said ‘it’s nice to be making some money for once’ after the beleaguered store posted its second profits upgrade in three months. 

Archie Norman, 67, who has been overseeing the restructuring of the 137-year-old retail group alongside chief executive Steve Rowe, was speaking after the chain beat forecasts for first-half profit.

M&S also upgraded its earnings outlook for the second time this year, sending its stock soaring on bets that one of Britain’s most elusive turnarounds could finally materialise. 

Shares in the retailer jumped as much as 21 per cent after it said it expected full-year profit before tax and adjusting items to be about £500million compared to previous guidance of over £350million.

But it cautioned that cost pressures will become progressively steeper and said the reintroduction of dividend payments in the current year remained unlikely.

Archie Norman (above), 67, who has been overseeing the restructuring of the group alongside chief executive Steve Rowe, was speaking after the chain beat forecasts for first-half profit

Mr Norman said it’s ‘quite nice to be making some money again’ after the chain’s announcement, reported The Times.

Meanwhile, 54-year-old Mr Rowe said: ‘Given the history of M&S we’ve been clear that we won’t overclaim our progress.

‘But … it is clear that underlying performance is improving, with our main businesses making important gains in market share and customer perception. 

‘The hard yards of driving long term change are beginning to be borne out in our performance.’

The group’s restructuring is focused on improving the quality and value of its clothing and food products, an overhaul of its store estate and investing in technology and e-commerce, including a venture with online supermarket Ocado.

The profit upgrade, only the second in at least two decades after one in August, is the strongest sign yet that the latest turnaround effort is starting to bear fruit after years of false dawns.

M&S also upgraded its earnings outlook for the second time this year, sending its stock soaring on bets that one of Britain’s most elusive turnarounds could finally materialise (file photo)

The company made a profit before tax and adjusting items of just £41.6million in the 2020-21 year.

M&S said trading for the first four weeks of its second half has been consistent with growth rates reported in the second quarter and ahead of management expectations. It said it expected the strong demand to be sustained in the near term.

First half food sales increased 10.4 per cent on 2019, before the pandemic impacted trading, while clothing and home revenue was down 1 per cent, with full price sales up 17.3 per cent.

Clothing and home online sales grew 60.8 per cent, representing 34.4 per cent of total sales. M&S cut its net debt to £3.15billion. 

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