11th Jan 2024 13:15
(Alliance News) - Marks & Spencer Group PLC enjoyed a mighty year in 2023, capped off by stellar Christmas trading, though a warning about rising costs in 2024 hit its shares on Thursday.
M&S shares more than doubled last year, helping the founding member of the FTSE 100 return to London's top tier.
Its once beleaguered Clothing & Home unit has grown has picked up pace, and its Food arm continues to be a success. However, a caution on "additional cost increases" suggests things may not always be rosy for the high street stalwart.
M&S shares were down 4.4% to 265.40 pence in London on Thursday afternoon, among the worst FTSE 100 performers. However, the stock is up a startling 85% over the past 12 months.
"We enter 2024 with a spring in our step, but clear eyed on the near-term challenges," said Chief Executive Stuart Machin.
However, the caution on costs suggests M&S is keeping its feet on the ground.
The retailer said it faces "additional costs increases from higher than anticipated wage and business rates". Turmoil in the Red Sea could also threaten to lift supply chain costs.
Edison analyst Russell Pointon commented: "Although cost pressures on some inputs have eased, the retail sector is not out of the woods from a cost perspective as it faces additional cost increases from higher than anticipated wage and business rates related cost inflation."
London-based M&S reported total sales of GBP3.86 billion in the 13 weeks that ended December 30, its financial third quarter. This was up 7.2% from a year before.
Within this, UK sales dominated at GBP3.57 billion, up 8.5%, or 8.1% on a like-for-like basis. Food sales were GBP2.33 billion, up 10.5%, or 9.9% like-for-like. Clothing & Home sales were GBP1.24 billion, up 4.8% both in total and like-for-like.
By contrast, International sales were small and negative for the company, falling by 6.4% to GBP288 million. M&S said the decline was caused by "the planned timing of franchise shipments in the Middle East and Asia and more challenging market conditions in India".
In Food, M&S said it led the UK market on volume growth, with an about 7% increase. The company said it benefitted from larger average shopping baskets, "as more customers looked to us for more of their full shop".
The food sales figures don't include Ocado Retail, M&S's joint venture with Ocado Group PLC.
In Clothing & Home, M&S said Womenswear was its standout category, and it noted that it went into the January sales with less Clothing & Home stock overall.
Shore analyst Clive Black talked up the firm's prospects, believing M&S to be back in form.
"A modernising M&S is reverting to the positive traits those of a certain age warmly remember. Grounded management speaks to confidence that FY24 will be 'consistent with market expectations'. FY25 headwinds will need to be encountered, albeit the firm is now much better placed to face the future, where the basis for sequential earnings per share and dividend per share growth is now upon us," Black added.
By Eric Cunha, Alliance News news editor
Comments and questions to [email protected]
Copyright 2024 Alliance News Ltd. All Rights Reserved.
Related Shares:
Marks & Spencer