Marks & Spencer raises profit forecast after strong start to year
Marks & Spencer has seen an improvement in sales and profit in the 19 weeks to 14 August as its transformation programme remains on track.
In a trading update, the retailer said its food business performed better than expected with sales increasing by 10.8% on last year and by 9.6% on the same period in 2019. M&S said the business benefited from a strong performance in core categories and within stores in retail park locations.
Meanwhile, clothing and home sales climbed by 92.2% on last year but were down 2.6% on the previous financial year. The retailer attributed a 9% rise in full price sales to a change in approach to trading that included more focused ranges, fewer promotions and a substantially smaller summer sale.
However, in-store clothing and home sales fell by 19.8% on the same period in 2019 as more customers shopped online during the coronavirus pandemic, although stores in retail parks outperformed. In contrast, online sales were up 61.8% on a two-year basis to account for around 35% of total sales in the category.
Meanwhile, the retailer’s international business saw its revenue climb by 39.7% year-on-year despite the impact of lockdown in India in the early part of the financial year and Brexit related effects on the supply of food to its businesses in the Ireland and France.
Assuming no further Covid-related restrictions are introduced, M&S now expects adjusted pre-tax profit for the year to be above the upper end of previous guidance of £300 million to £350 million.
The retailer said: “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 “Never the Same Again” changes. Despite this, there remains substantial uncertainty as to the continued strength of consumer demand, as well as disruption in both supply chains and consequent pressures on costs and margin.”
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