Marks & Spencer Anticipates Strong Annual Profit Growth

Marks & Spencer Anticipates Strong Annual Profit Growth
credit: retail-week

London (Parliament News) – Marks & Spencer is expected to announce a 35% rise in annual profits, reaching £653 million, driven by strong sales in food, clothing, and home sectors. The retailer’s turnaround includes cost-cutting, store closures, and resumed dividends.

High street bellwether Marks & Spencer is anticipated to reveal a jump in annual earnings on Wednesday when it reports back after a bumper year. The retailer has relished buoyant sales across its food halls and clothing and home arm, having experienced a significant turnaround plan in contemporary years, including cost-cutting and store closures.

How Did Marks & Spencer Achieve Strong Earnings Growth?

It has also provided cheer for investors, resuming its prize payout in 2023 after a four-year pause, in a year that also witnessed its return to the FTSE 100 Index. Most analysts are pencilling in a 35% incline in underlying pre-tax profits to £653 million for the year to April on earnings 8.9% higher, according to AJ Bell.

Guy Lawson-Johns, equity reviewer at Hargreaves Lansdown, said: “Growing market share and margins whilst embarking on a significant cost-cutting programme is a tough balancing act, but the group’s nailed it so far. Along with Lidl and the retail arm of Ocado, which it owns a 50% share of, M&S was ranked as Britain’s fastest-growing grocer over the last quarter.

“But the retail sector is a notoriously tricky operating environment and wage inflation and business rates have provided an unwanted challenge to its cost-cutting programme.”

What Are Analysts Saying About M&S’s Performance?

Danni Hewson, AJ Bell’s head of financial analysis, stated the final six months of the year may also have been quieter for M&S, with all eyes also appointed to be on the outlook for the current year. She stated: “Ongoing investment, variable weather, sticky interest rates and the uncertain economic outlook could have made for a quieter-than-usual second half, but M&S does seem to be on the right track.” She pointed to a growth in consumer spending from higher salaries, while M&S’s clothing arm is also “on a roll” thanks to more reasonable ranges and faster stock turn.

“Any guidance for the year to March 2025 will be just as important as the results for fiscal 2024 and the consensus estimate is for an 8% increase in underlying pre-tax profit to £705 million, with like-for-like sales growth of around 2%, helped by the ongoing £400 million cost savings programme,” she declared.

It was announced earlier this year that Ocado could take lawful action against M&S unless they reach an agreement over the last instalment of £190.7 million as part of the price for the £750 million 50-50 Ocado Retail tie-up, which was founded in 2019.

Ocado Group boss Tim Steiner expressed the firm will “most likely” reach a negotiated compromise over the payment. M&S has the option this financial year to reduce Ocado Retail’s numbers into its own accounts, “and that could consider on the group’s profits, given how the operation continues to lose money”, according to Ms Hewson.

Federica Calabrò

Federica Calabrò is a journalist at Parliament News, She is covering Business and General World News. She is a native of Naples, commenced her career as a teller at Poste Italiane before following her passion for dance. Graduating in classical dance, she showcased her talents with two entertainment companies, enchanting audiences throughout Italy. Presently, Federica serves as the general secretary at the Allianz Bank Financial Advisors financial promotion center in Naples. In this capacity, she manages office forms, provides document assistance for Financial Advisors, oversees paperwork for the back office, and ensures smooth customer reception and assistance at the front office. Outside her professional obligations, Federica indulges in her passion for writing in her leisure time.