Marks and Spencer (M&S) has lifted its full year profit expectations as the high street retailer looks to expand its store offering – and take over six former Debenhams sites.
Shares surged a massive 15.76 per cent to 225.10p per share by mid-morning, boosting the entire market.
“The shares have come roaring back from the brutal decline of June/July, but with January 2020 levels now recovered the question will be where the next big of good news can come from,” chief market analyst at IG Group Chris Beauchamp said.
“If it can dodge most of the supply chain concerns there is room for more upside, but the stock needs a fairly rosy assessment of Christmas sales to keep moving higher, and that might just put off disappointment until January and the post-festive trading statement.”
The group secured a profit before tax of £187.3m in the six months to October 2, swinging for its loss of £87.6m last year and the £158.8m it snagged in prior to the pandemic.
While profit before tax and adjusting items for the whole year looks to be “ahead of expectations” and in the ballpark of £500m, M&S said in a statement.
The retailer’s UK store pipeline now includes 20 full line stores, which enabled the group to close three others in the first half of the year.
Food sales jumped 10.4 per cent in the period, while clothes and home sales sank one per cent – though customers are snapping up goods before they hit the discount rack, with full price sales up 17.3 per cent.
However, despite the brick and mortar expansions, M&S reported a more than 17 per cent slip in store sales, with online sales now making up 34.4 per cent of total clothes and home purchases.
Online sales growth, which has been spurred on by the pandemic for most retailers, has surged 60.8 per cent in the period.
Chief executive Steve Rowe said: “Given the history of M&S we’ve been clear that we won’t overclaim our progress. Unpacking the numbers isn’t a linear exercise and we’ve called out the Covid bounce back tailwinds, as well as the headwinds from the pandemic, supply chain and Brexit, some of which will continue into next year.
“But, thanks to the hard work of our colleagues, it is clear that underlying performance is improving, with our main businesses making important gains in market share and customer perception. The hard yards of driving long term change are beginning to be borne out in our performance.”
Meanwhile, the high street staple slashed its debt by over 22 per cent on pre-pandemic levels, shaving the figure down to £3.15bn.