Shares in FTSE 100 retailer Marks & Spencer Group jumped in midweek trading as the firm announced forecast-beating results for the last financial year.
At 297.2p per share, Marks & Spencer’s share price was last 8.6% higher in Wednesday business.
Revenues at the company rose 9.4% in the 12 months to March, to £13.1 billion, as its turnaround strategy continued delivering the goods. This drove pre-tax profits 58% higher, to £716.4 million.
Ocado Remains Problematic
At its UK Food division, sales rose 13% year on year to £8.2 billion. Meanwhile, UK Clothing and Home revenues increased 5.3% to £3.9 billion.
M&S said that it food unit delivered “market-leading volume growth,” thanks in part to strong demand for its ‘Remarksable Value’ range of low-cost edible goods.
Clothing and Home produced “market-leading share growth” over the period, M&S added. It noted that this was thanks to “better product, style and quality at everyday great value.”
However, M&S’ Ocado online grocery joint venture remained a thorn in its side. Post-tax losses here widened to £133.7 million in financial 2024 from £59 million a year earlier.
This was due to “higher interest costs on shareholder loan funding and a write off of a deferred tax asset,” the company said.
Cost Reduction Targets Rise
Marks & Spencer’s profits column was boosted by a £100 million cost reduction last year. This was achieved through supply chain improvements and its ongoing transition to an omnichannel retailer, it said.
The company now hopes to achieve £500 million worth of cost savings by financial 2028, up from a previously-targeted £400 million.
First Dividend Since 2020
Marks & Spencer also announced plans to pay dividends again thanks to a strong improvement in its balance sheet.
The company said it will deliver a 3p per share payout for the last year. This is the first dividend from the FTSE 100 firm for four years.
Free cash flow jumped to £413.7 million in fiscal 2024 from £170.4 million previously. Net debt fell by around £470 million over the period, to £2.2 billion.
“Wind In Our Sails”
Marks & Spencer chief executive Stuart Machin said that “two years into our plan to Reshape for Growth we can see the beginnings of a new M&S. Food and Clothing and Home grew volume and value share ahead of the market and sales increased across stores and online.”
He added that “both businesses have now delivered 12 consecutive quarters of sales growth and this trading momentum gives us wind in our sails, and confidence that our plan is working. We are becoming more relevant, to more people, more of the time.”
“Excellent Year”
Analyst Charlie Huggins of Wealth Club noted that “M&S has had an excellent year and there is now enough evidence to suggest this isn’t a flash in the pan.”
He commented that “the most impressive thing about the M&S turnaround story so far has been the market share gains, in both Clothing and Food. They have been able to achieve this while reducing discounts, which is a good sign.”
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