M&S buoyant as fashion demand recovers
There was some good news coming out of Marks & Spencer for once on Friday as it upgraded its profit outlook after shoppers went online to buy more of its revamped clothing offer and also bought plenty of its foods.
This added to earlier signs that the current turnaround plan is delivering and a 10%+ share price rise suggested investors believe the latest turnaround really will endure.
The high street giant cited pent-up consumer demand, but also highlighted how the changes it has made are proving it’s on the right track at last.
Assuming no further Covid-related restrictions on trading, it’s expecting adjusted pre-tax profit for the year to be above the upper end of previous guidance of £300million-£350 million, it said in a surprise trading update.
In the 19 weeks to August 14, the clothing & home division saw revenue surging 92.2% compared to last year and down only 2.6% on the pre-pandemic period in 2019. In previous years that might not have been seen as a positive, given that it was the latest in a series of declines. But in the current circumstances, it’s undeniably encouraging.
“The change in our approach to trading, including more focused ranges, fewer promotions and a substantially smaller summer sale, has resulted in full-price sales up c.9% on 2019/20,” it said. “The pivot to online has continued with store sales down 19.8% on 2019/20 as many locations remain in slow recovery from the pandemic, although retail parks have outperformed. The business has improved its online and data capability. clothing & home online sales are up 61.8% on 2019/20 and comprised c.35% of total clothing and home sales, and our guest brands and Sparks programme are performing well.”
It also said that International revenue was up 39.7% on last year and down only 5.2% on 2019/20, 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 push into global online remains promising with sales up c.40% on last year and more than doubling on 2019/20”, it added.
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