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The boss of Marks and Spencer has hailed “the beginnings of a new M&S” after the UK retailer posted higher than expected profits and announced its first dividend since 2019.
The 140-year-old retailer posted a profit before tax and adjusted items of £716mn for the year to March 30, beating analysts’ expectations and the £453mn it made the previous year, amid a revival in its food and clothing divisions.
M&S said it was in the “strongest financial health since 1997”, with the results boosting shares by 8 per cent to 295.2p in morning trading on Wednesday.
After two decades of false dawns under several management teams, chief executive Stuart Machin said: “We have wind in our sails, confidence that our plan is working . . . and there’s so much more opportunity ahead of us. I think we’re at the beginnings of a new M&S. We are becoming more relevant, to more people, more of the time.”
The FTSE 100 company, which laid out a five-year growth plan to investors in 2022, was buoyed by its food and clothing and home divisions, with sales up 13 per cent and 5.3 per cent respectively, as the company’s turnaround plans started to pay off. Group revenues rose 9.4 per cent to £13bn, while pre-tax profit was up 41.4 per cent to £672.5mn.
The company said it was in the best financial position in almost 30 years, having ended the year with net funds of about £46mn, excluding lease liabilities. It will also pay a full-year dividend of 3p a share — the first since 2019 — following 12 consecutive quarters of sales growth.
M&S has been closing less profitable or productive stores that sold clothing, home and food products in recent years and opened more of its popular food shops.
It has also modernised its clothing ranges and been trying to convince more shoppers to do a “full shop” with M&S rather than only visit for special occasions or top-ups by improving the quality and price of its products.
Machin said clothing sales, up by 5.2 per cent on a like-for-like basis to almost £4bn, were boosted by menswear, denim and lingerie, having sold 114 pairs of underwear every minute last year, increasingly to younger customers under 30.
Consumers were “feeling more optimistic about things”, he added, but they were still conscious of higher mortgage rates and political uncertainty and remained focused on value.
M&S was among the fastest-growing supermarkets in the latest 12-week period, according to industry data from NIQ, beaten only by Lidl and Ocado. In April, it had a market share of 3.6 per cent compared with rival Waitrose at 3.8 per cent.
Clive Black, a retail analyst at Shore Capital, said he expected sales to continue to grow but did not expect such strong performance again this financial year.
“Given our record of delivering volume growth, market share and free cash flow we are confident that we will make further progress in 2024/25 and beyond,” M&S said.
