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Marks & Spencer said its turnaround plan was starting to pay off as it returned to profit but warned of the impact of supply chain strains and higher labour costs over coming months.
The retailer reported a profit of £187.3m for the six months to 2 October compared with a pandemic-induced loss of £87.6m a year earlier – helped by a bounce-back after lockdowns as well as the “hard yards” of its transformation taking effect.
Shares surged by 16% as M&S also upgraded its profit guidance for the full year – for the second time in three months.
Sales in its revamped clothing and home division were 1% lower than pre-pandemic levels but there was a marked contrast between stores, where they slipped by 17.6%, and online – which saw an increase of 60.8%.
“The re-engineering of the clothing and home operating model is now demonstrating its potential to reverse years of decline in the business,” M&S said.
Food sales grew by 10.4% while an online tie-up with Ocado – which ditched previous retail partner Waitrose – was affected by a slowdown compared to a lockdown boost a year ago.
There was also a fire at a major Ocado warehouse in Erith in July.
M&S has been undergoing a painful transformation as it aims to restore its fortunes after years of struggle as well as recovering from the impact of the pandemic – which is continuing to affect trading at city centre sites.
The plan includes the closure of at least 110 stores, relocation to new sites, downgrading to food-only outlets or consolidation of shops into one, with the aim of reducing its “full-line” stores to 180.
Shares surged on the results
But it also means the opening of new sites, with 20 currently in the pipeline, including six that were once home to collapsed rival Debenhams – now an online-only…
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Source : skynews
