Marks & Spencer (M&S), the iconic British retailer, has raised its profit outlook, citing strong demand in its stores as a key factor in attracting new customers across its clothing, home, and food businesses. The company, which has been in operation for 139 years, has seen its shares rise by 66% this year. It now anticipates profit growth for its full 2023-24 year, a departure from its previous forecast of a small decline. As a result, M&S shares experienced an 8% surge.
M&S, like other major British retailers, has managed to benefit from resilient consumer spending, despite the ongoing cost-of-living crisis that has persisted for the past year. However, the company’s success can also be attributed to its focus on providing high-quality food offerings, which have appealed to shoppers who are less inclined to dine out. Additionally, M&S’s well-priced fashion ranges, which are regularly refreshed, have also garnered positive attention.
This unexpected announcement, which promised a “significant improvement” compared to previous expectations outlined in its interim results published in November, had a ripple effect on other retailers’ share prices, including Next and Primark’s parent company. M&S reported over 11% growth in like-for-like food sales during the first 19 weeks of the year, while clothing and home sales increased by over 6% on the same basis. The group’s operating margin has remained robust.
However, M&S did caution that significant uncertainties regarding the economic outlook persist, and there is a risk of the consumer market tightening as the year progresses. Under the leadership of CEO Stuart Machin, M&S is actively working towards building a more resilient business. This involves prioritizing the quality and value of its clothing and food offerings, investing heavily in technology and e-commerce, and implementing a comprehensive overhaul of its store estate.
Once considered the go-to destination for British households seeking school uniforms, bedding, food, and underwear, M&S has faced difficulties in attracting younger, fashion-forward customers while still catering to its loyal older clientele who seek high-quality basics like jumpers. However, the company’s investments in faster fashion ranges have garnered praise in the fashion industry, allowing M&S to regain a sense of style. Moreover, its efforts to lower the prices of certain food items while still offering high-quality wine and meal deals for those who prefer to stay at home have contributed to increased sales.
While M&S’s positive outlook is encouraging, it is important to note that uncertainties in the economic landscape persist. The company remains vigilant in navigating potential challenges and adapting to changing consumer preferences. Nonetheless, M&S’s commitment to quality, value, and innovation positions it well for continued success in the retail industry.