M&S set to announce positive news on trading
MARKS & Spencer is expected to announce further progress in its turnaround and post-pandemic recovery on Wednesday, although there will continue to be caution amid a rocky retail backdrop.
The retail giant will give its latest half-year trading figures to shareholders on Thursday.
It is expected to show profits above pre-pandemic levels after a strong year of recovery, with analysts at Jefferies forecasting a £264m pre-tax profit, compared with £176m two years ago.
Five City analysts have made first-half profit projections ranging from £205m to £264m.
The retailer has continued to make positive strides this year, with its share price currently double its value from last November.
Both M&S’ clothing and home and food businesses have been described as “stronger” than they were before the pandemic.
Shareholders and analysts alike have reacted positively to the group’s transformation process under the leadership of Steve Rowe, with many calling on investors to buy the stock. Jefferies analysts said they “suspect” the company will report figures ahead of “conservative” estimates.
In August, M&S raised its profit outlook on the back of an “improving” sales performance, particularly buoyed by 10.8% growth in its food business. The group has seen its food operation outperform the market amid improving value, while it has also benefited from its joint venture with Ocado.
Jonathan Pritchard at Peel Hunt said: “On the food side, the value perception is better than it has been for five years and the promotional offer is far less confusing.”
M&S has also reported recent progress in the recovery of its clothing and home operation, which has been the focus of Mr Rowe’s transformation efforts.
The company has reduced lead times and boosted its brand credentials through deals with the likes of Jaeger, reporting sales just shy of pre-pandemic levels in August despite significantly depressed highstreet footfall. Nevertheless, investors will also be particularly keen to hear bosses address the current impact of supply chain disruption and soaring cost inflation.
Christmas is key for many retailers but represents a particularly important period for M&S, with giftshopping sparking more demand in clothing and home while its food business also typically sees a surge in customer numbers.
Shareholders will be eager to find out how the business has shielded itself from global supply issues as well as concerns closer to home, such as the HGV driver shortage.