Marks & Spencer ups profit forecast amid strong sales

Marks & Spencer increased its profit forecast on Friday following an “encouraging” trading performance which it said confirmed that its transformation programme is “on track”.

The British retailer said it now expects adjusted profit before tax for the year to be above the upper end of previous guidance of 300 million pounds to 350 million pounds, “assuming no further Covid-related restrictions on trading”.

In a trading update for the 19 weeks to August 14, the company said revenue in its clothing and home department has increased 92.2 percent compared to a year ago, but remains 2.6 percent below pre-Covid 2019 levels.

It said the sales improvement was thanks to “a new approach to trading” which included more focussed ranges, fewer promotions and a substantially smaller summer sale. It meant full-price sales were up 9 percent compared to 2019 levels.

Online sales continue to shine

The company said its online business also continued to perform well, with online sales from the clothing and home department up 61.8 percent compared with 2019 levels, comprising around 35 percent of the department’s total sales.

Meanwhile, revenue from the company’s food department outperformed, increasing 10.8 percent compared to last year and up 9.6 percent compared to 2019. It said core categories and retail park locations traded strongly, and that its hospitality and franchise businesses are also progressively improving, though remain below 2019 levels due to reduced footfall and “the slow return to more normal work patterns”.

International revenue was up 39.7 percent compared to last year and down only 5.2 percent compared to 2019 despite the impact of lockdown in India in the early part of the financial year and “substantial” Brexit related effects on the supply of food to its businesses in the Republic of Ireland and France.

The company also said its “push into global online remains promising”, with sales up 40 percent on last year and more than doubling from 2019 levels.

Marks & Spencer will report its half-year results on November 10.