Shares in M&S soar as sales bounce back
SHARES in Marks & spencer soared after it raised profit forecasts for the first time this century.
In an unscheduled trading update, the 137-year-old chain hailed an ‘encouraging performance’ as shoppers returned to the High street following the easing of lockdown restrictions.
The food business was again the stand-out performer, with sales over the past 19 weeks 10.8pc higher than in the same period last year. They were also 9.6pc up on 2019.
The company also welcomed a ‘good recovery’ in clothing sales, which were hammered during the pandemic as stores were shut.
Revenues in the clothing and home division were up 92.2pc on last year but down 2.6pc on 2019.
M&s now expects profits for the year to be above the top end of its previous guidance of between £300m to £350m.
It said the figures showed the turnaround plan under chief executive steve Rowe and chairman Archie Norman was ‘on track’.
shares jumped 14.1pc, or 20.1p, to 162.8p but remain nearly 30pc below pre-pandemic levels and a far cry from the peak of over 700p in 2007.
‘Although there has likely been an element of pent-up consumer demand in trading to date, we believe this performance provides strong confirmation of the beneficial effects of the last 18 months,’ Norman said.
‘Despite this, there remains substantial uncertainty as to the continued strength of consumer demand, as well as disruption in supply chains and consequent pressures on costs and margin.’
Analysts at Jefferies said the improved guidance ‘still looks conservative’. Danni Hewson, a financial analyst at AJ Bell, said: ‘It is a mark both of how significant the latest update is and just how miserable its recent history has been that it represents the first unscheduled upgrade to earnings in years.
‘Investors have had to get used to a diet of disappointments largely connected to its home and clothing arm.
‘It is early days but this encouraging news suggests Marks could be on the road to emulating Next, which is excellent at combining its stores and its online capacity to get consumers the products they want when they want them.
‘At the very least it demonstrates that the turnaround programme led by steve Rowe is gaining some traction. M&s’s confidence in lifting guidance so early in its financial year is a positive sign.’
■ Retail sales fell 2.5pc in July as shoppers spent less in supermarkets and more on going out, says the Office for National statistics. Retail sales are still well above prepandemic levels but food sales fell as hospitality restrictions were lifted, and fuel sales also dipped.