UK's M&S cautious on 2024 outlook after H1 profit beats expectations
British retailer Marks & Spencer reported a much better-than-expected 75 per cent rise in first-half profit and restored its dividend but cautioned the combination of high borrowing costs, erratic weather and geopolitical events may soon weigh on shoppers.
After more than a decade of failed turnaround efforts, M&S CEO Stuart Machin is seeking to build a more resilient business with a renewed focus on the quality and value of its clothing and food, heavy investment in technology and e-commerce, and a radical overhaul of its store estate.
The 139-year group, one of the best known names in British business, said its trading momentum had been maintained through October and it was planning for a good Christmas, with customers already responding positively to its ranges.
“However, as we enter 2024, we are not relying on the favourable recent market conditions persisting,” it said.
It cautioned the economic outlook remained uncertain and flagged the impact on the consumer from the highest interest rates in 20 years, geopolitical events, and erratic weather.
“Therefore, against more challenging comparatives, we expect profit before tax and adjusting items to be weighted towards the first half, as we remain laser-focused on our long-term ambition to reshape M&S for future growth,” it said.
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Prior to Wednesday’s update, analysts were on average forecasting a 2023/24 profit before tax and adjusting items of £574 million (S$953.9 million), up from £482 million in 2022/23.
M&S reported profit of £360.2 million for the six months to Sept 30, versus analysts’ average forecast of £276 million.
Revenue rose 10.8 per cent to £6.13 billion as it won market share in both divisions. Food sales were up 14.7 per cent, while clothing & home sales increased 5.7 per cent. REUTERS
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