Marks & Spencer's (M&S) turnaround efforts appear to be paying off as the British retailer posted a 17.2% increase in first-half profit, surpassing expectations and fueling optimism for further
gains throughout the financial year.
Under CEO Stuart Machin, M&S has finally seen success after years of unfulfilled revival attempts. The company’s transformation strategy includes significant investments in the quality and value of its food and clothing, a revamp of its store network, advancements in technology and e-commerce, and a modernization of its supply chain.
Shares in M&S rose over 3% in early trading on Wednesday, adding to a 76% gain over the past year.
For the six months ending September 28, M&S reported profit before tax and adjusting items of £407.8 million ($524.6 million), exceeding analysts’ forecasts of £361 million and the previous year's £348.1 million for the same period. Total revenue increased by 5.7% to £6.48 billion, with food sales up 8.1% and clothing and homeware sales up 4.7%.
"The first five weeks of the second half have met our expectations, and we are confident of making further progress for the remainder of the year," M&S stated.
This positive update follows other strong performances in the sector: clothing rival Next raised its profit outlook last week, and Primark expressed optimism for the upcoming holiday season.
However, M&S noted that cost inflation outpaced overall inflation in the first half, and it expects this trend to continue amid an uncertain consumer environment. CEO Machin also commented on the recent budget changes from the new Labour government, which raised taxes and the minimum wage, describing the impact on M&S and its stakeholders as "uncertain for now."
Despite these challenges, Machin expressed confidence in the company’s growth potential: "Our strong trading momentum shows there is much more opportunity for future growth, which energizes us."
Analysts had previously forecasted full-year profit before tax and adjusting items of £780 million, up from £716.4 million in 2023/24, prior to M&S's latest update.