By James Davey
LONDON (Reuters) -Britain's Marks & Spencer (OTC:MAKSY) (M&S) smashed first-half profit forecasts and said it expects full-year profit to leap more than 30% as its latest turnaround effort after years of false dawns gathered momentum.
Shares in the 139-year old retailer, one of the biggest names in British business, were up 11% in afternoon trading after it said an overhaul of its food, fashion and supply chain had helped it deliver a 75% jump in first-half profit and reinstate its dividend after four years.
Its shares have more than doubled over the last year.
"I'm quietly confident on Christmas ... I think we're in very good shape," M&S CEO Stuart Machin told reporters, adding to optimistic comments on the festive season made by UK rivals Tesco (OTC:TSCDY), Sainsbury's, Next and Primark which contrasted with downbeat recent macro data.
Machin said M&S had traded well through October and shoppers were already snapping up its Christmas ranges.
He said M&S's Christmas food-to-order service had seen orders up 25% on last year, sales of party food were up by "double digits" and sales of women's partywear were up 50%, with one black sequin dress already selling 5,000 units in one week.
M&S's bias towards older, more affluent, customers is giving it some protection from the rising cost of living.
The results showed that after more than a decade of failed turnaround efforts, M&S was finally reaping the rewards of an expensive investment programme to improve the quality and value of its clothing and food, upgrade its technology and e-commerce operations, and radically overhaul its store estate.
M&S said investments in its supply chain, which have enabled it to source popular clothing styles more quickly, had led to an increase in volumes sold, plus an improvement in its profitability.
It now expects analysts' consensus forecast for annual profit to rise to 640 million pounds ($785 million) from 575 million before Wednesday's update and versus 482 million pounds in 2022/23.
"Another very strong set of results which demonstrates that the strategy to re-shape the business is really starting to deliver," Ian Lance, fund manager at Redwheel, one of M&S's biggest shareholders, told Reuters.
M&S did warn, however, that with so much uncertainty on the economic horizon, from the highest interest rates in 20 years to geopolitical events and erratic weather, it could see pressures grow in 2024, with Machin noting 78% of its customers remain concerned about the cost of living.
M&S reported a profit of 360.2 million pounds for the six months to Sept. 30, topping an average of 276 million expected by from analysts.
Revenue rose 10.8% to 6.13 billion pounds as it won market share in both divisions. Food sales were up 14.7%, while clothing and home sales increased 5.7%.
"The shares have done well but were surely not discounting a beat of this magnitude, said analysts at Peel Hunt.
($1 = 0.8149 pounds)