8th Nov 2023 09:23
(Alliance News) - Marks & Spencer Group PLC on Wednesday cemented its return to form, with strong half-year results adding some "pre-festive period sparkle".
Shares in the retailer jumped 9.8% to 247.20 pence. The stock has more than doubled over the past 12 months.
The company, which had previously announced it would resume payouts, went ahead and declared a 1.0 pence per share interim dividend.
"M&S's results have provided some pre-festive period sparkle, albeit with the caveat of an uncertain consumer backdrop next year. Sales have risen more or less across the board, profits have surged, and its balance sheet has strengthened – shareholders will also benefit from the restoration of a modest dividend after four years without one. Through a range of self-help measures, M&S is in a much better position than it was only a couple of years ago," RBC Brewin Dolphin analyst Zoe Gillespie said.
M&S reported improved interim results and early signs suggest the clothing, home and food retailer will enjoy a decent Christmas.
Revenue in the half-year to September 30 increased 11% to GBP6.13 billion from GBP5.54 billion a year earlier. Pretax profit jumped 56% to GBP325.6 million from GBP208.5 million.
M&S said: "M&S's first half results showed a good year-on-year improvement in almost all businesses. Favourable market conditions, surprisingly resilient consumer demand and the effect of competitor exits from the market provided a solid backdrop. In this environment, the strategy to reshape for growth has enabled M&S to increase customer numbers and market share in both businesses, with healthy volume growth and reduced promotions in Food, higher than expected full price sales in Clothing & Home and structural cost reduction supporting robust margins."
Food sales rose 15%, while in Clothing & Home, they increased 5.7%.
Chief Executive Stuart Machin said: "Looking ahead, trading momentum has been maintained through October, with customers responding positively to our Christmas ranges. There will be challenges and headwinds in the year ahead and progress won't be linear, but we are ambitious for future growth and are driving what is in our control."
Analysts at Peel Hunt labelled the results as "embarrassingly good".
"The shares have done well but were surely not discounting a beat of this magnitude. We believe Marks & Spencer is doing many things right but there is more to do, which is true of the shares as well," analysts at the investment bank said.
"We reiterate our buy rating and 300p target price - this is one of our top picks in the sector."
M&S returned to London's FTSE 100 following an index review which came into effect in September. The founding member had a four-year absence of the top flight.
By Eric Cunha, Alliance News news editor
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