M&S Posts Strong Interim Results; Reinstates Dividend

Marks and Spencer Group Plc has published half year results for the 26 weeks ended 30th September 2023, advising that the "Reshaping M&S" strategy has delivered strong results. 

Strong first half results

• Profit before tax and adjusting items of £360.2m (2022/23: £205.5m)
• Statutory profit before tax of £325.6m (2022/23: £208.5m)
• Food sales up 14.7%; adjusted operating profit £164.9m (2022/23: £71.8m) and margin of 4.3%
• Clothing & Home sales¹ up 5.7%; adjusted operating profit £223.4m (2022/23: £171.4m) and margin of 12.1%
• Ocado Retail share of adjusted loss £23.4m (2022/23: share of loss £0.7m)
• International constant currency sales up 3.9%; adjusted operating profit £43.4m (2022/23: £39.0m)
• Stronger balance sheet: free cash flow reducing net debt and interest costs. Restoration of dividend of 1p per share.

Strategy to reshape M&S is delivering

• Food driving volume and share reflecting value investment, product innovation and quality upgrades
• Clothing & Home building improved style and value perceptions and increasing full price sales mix
• Ocado Retail reset progress; early stages of investment in value, service and increased M&S range
• Structural cost reduction programme on track with savings of over £100m delivered in the first half
• Accelerating store rotation; new full line stores and renewals performing ahead of plan
• Progress on supply chain modernisation; Gist benefits on track; C&H early savings from network plan
• More to do to drive online growth and improve returns on data, digital and technology investment
• Reshaping with a clearer vision, purpose and performance-driven culture to drive execution and pace

Stuart Machin, Chief Executive said:

"Our strategy to reshape M&S for growth has delivered strong results in the first half. We have maintained our relentless focus on trusted value, giving our customers exceptional quality product at the best possible price. In Food, we delivered over 500 quality upgrades and invested over £30m in price, lowering the price of 200 products and locking prices on 150 customer favourites. Our lead on quality perception widened and value perception continued to improve. In Clothing & Home we backed lines with authority across core and seasonal product, maintaining our lead on quality and value perception and improving our style credentials. As a result, we've sold more product and served more customers across Food and Clothing & Home, with both businesses outperforming the market.

Sales growth was supported by our investment in store rotation, which continued at pace. Three full line stores opened and six were renewed, all attracting new customers and performing ahead of plan. Our cost reduction programme is on track with over £100m savings delivered in the half and investment in supply chain modernisation driving efficiencies, translating volume growth to improved margin and profitability.

I am clear that if we serve our customers well, we serve our shareholders well, and our unrelenting focus on trusted value is matched by disciplined capital allocation. We have further strengthened our balance sheet and net debt position, with an interim dividend payment being made to shareholders for the first time in four years.

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.

Everyone at M&S makes change happen and I want to thank my colleagues for their contribution to these results. I also want to thank them in advance for what they are about to do. All of us will be sleeves rolled up, out in stores and distribution centres, bringing the magic of M&S alive for our customers this Christmas. In summary - we're only just beginning. Lots done, lots to do, lots of opportunity." 

Non-GAAP measures and alternative profit measures (APMs) are discussed within this release. A glossary and reconciliation to statutory measures is provided at the end. Adjusted results are consistent with how business performance is measured internally and presented to aid comparability. Refer to adjusting items table below for further details. ¹References to 'sales' throughout this announcement are statutory revenue plus the gross value of consignment sales ex. VAT.

Source : Marks & Spencer Group PLC

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