M&S enjoys healthy profits despite cost-of-living crisis
MARKS & Spencer is set to reveal another rise in sales despite concerns over the effect of the soaring cost of living on the high street.
The retailer’s shares have been robust in recent months as it continues to make progress following the turnaround plan launched by previous CEO Steve Rowe.
Investors will hope it can point towards a continued upward trajectory when its current bosses update the market on Wednesday after a year in the hot seat.
M&S is expected to reveal another jump in sales for the year to April, with 7.7 per cent growth projected in its food division and a 10.5 per cent rise in clothing and home sales.
It comes despite pressure on shopper budgets, as household bills have shot up, causing some Britons to reassess spending on non-essential products.
However, in its previous trading update in January, M&S said both its food hall business and clothing and home division saw significant sales increases over the previous quarter.
Shareholders will be particularly keen to see further progress in the clothing operation, which had become a problem area for the company before the transformation plan was launched.
Jonathan Pritchard, analyst at Peel Hunt, said: “The clothing side is improving and there is a confidence in the formats that we have not seen here for a good while.”
He added that the group has benefited from a continued shake-up of its store portfolio, describing the recent programme of refurbishments as “the best we have seen”.
The retailer said earlier this year it would invest around £500million into its stores, in a move set to create 3,400 jobs. Meanwhile, Shore Capital’s Clive Black said the business is well positioned in food, as the group “continues to materially outperform Waitrose”, the supermarket arm of the John Lewis Partnership, in the premium grocery space.
Pre-tax profits are also expected to nudge higher for the past year, according to industry analysts.
A consensus of experts predicts that the firm will post a £436million pre-tax profit for the year, up from £391.7million. This is despite continued investment into improved food pricing, as it seeks to keep sales momentum amid pressure on its customers’ finances.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: “Re-building margins is a big focus given the cost-pressures and inflationary headwinds, and investors are likely to cheer evidence which might show the tie-up with logistics provider Gist is helping the company gain more control over its supply chain.”