Good news from M&S continues as fashion ops outperform

Marks & Spencer delivered its results for the 26 weeks to the end of September on Wednesday and said that its ‘Reshaping MS’ strategy delivered a “strong” half year.

And a quick look at the figures support its upbeat stance. Profit before tax and adjusting items rose to £360.2 million from £205.5 million; statutory profit before tax jumped to £325.6 million from £208.5 million; and Clothing & Home sales rose, 5.7%, with adjusted operating profit in this division up to £223.4 million from £171.4 million a year ago.

Meanwhile, international constant currency sales rose 3.9% with adjusted operating profit of £43.4 million, up from £39 million. 

And in a further sign of confidence, the company is also restoring the twice-yearly dividend it pays to its shareholders.

Looking particularly at the Clothing & Home results, the company said improved style and value perceptions were key during the period and it increased its full-price sales mix. 

While total C&H sales were up by the aforementioned 5.7%, like-for-like sales were good too with an increase of 5.5%, helped by “more confident buying”. Notable highlights were areas such as holiday and denim. 

In fact, women’s denim and casual bottom sales increased 17%, while holiday wear increased 18%. Prices were frozen on school uniforms for the third consecutive year, while improvements to kids’ casualwear drove sales growth. 

M&S Clothing continued to “hold leading net promoter scores for quality and value, with style perceptions improving further. It achieved the leading market share position for summer in womenswear for the first time in four years, with overall market share for Clothing & Footwear reaching 9.5%”, it said, citing Kantar figures.

Customer numbers increased, and sales grew across channels. It’s particularly interesting that the company said stores outperformed online, further underlining the ongoing importance of physical spaces for UK retail. 

The C&H division’s adjusted operating margin increased to 12.1% from 9.8% last year, supported by a “modest increase” in the full-price sales mix to 82%, by cost reduction in the logistics network and better currency and freight rates than anticipated.  

Meanwhile, online sales grew 4.6%, and the online adjusted operating profit margin increased to 9% from 6.9% “as a result of robust full-price sales and growth of click & collect, which helped to reduce fulfilment costs”.

CEO Stuart Machin said: “Our strategy has delivered strong results in the first half. We have maintained our relentless focus on trusted value, giving our customers exceptional quality product at the best possible price. In Clothing & Home we backed lines with authority across core and seasonal product, maintaining our lead on quality and value perception and improving our style credentials. As a result, we’ve sold more product and served more customers [with] Clothing & Home… outperforming the market.”

Sales growth was also supported by its investment in its stores, “which continued at pace”. Three full-line stores were opened and six were renewed, “all attracting new customers and performing ahead of plan”.

The company added that trading momentum has been maintained through October, which is undeniably encouraging news given how tough October was for so many who operate in the fashion retail sector. 

It’s “planning for a good Christmas, with customers already responding positively to our ranges”. 

But it added that it’s “not relying on the favourable recent market conditions persisting. The outlook remains uncertain with the probable impact on the consumer of the highest interest rates in 20 years, deflation, geopolitical events, and erratic weather.  

“Notwithstanding this backdrop, we will continue to invest in trusted value for our customers and we are increasing our investment in the reshaping of M&S in the second half. 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.”