Get 40% Off
🚀 Our AI Picked 6 Stocks that Jumped +25% in Q1. Which Picks Will Soar in Q2?Unlock full list

Marks and Spencer reports significant profit boost, reinstates dividend

EditorHari G
Published 11/08/2023, 06:31 AM
Updated 11/08/2023, 06:31 AM
© Reuters.

UK retailer Marks and Spencer (LON:MKS) (M&S) reported a pre-tax profit of £326 million for the first half of its fiscal year, marking a considerable increase from £208 million in the same period last year. This profit boost was primarily driven by a substantial rise in food sales, which climbed nearly 15%.

On Tuesday, M&S declared an interim dividend of 1p per share, its first since the onset of the COVID-19 pandemic. This announcement triggered a 9% surge in its shares to 245.5p during early trading hours in London.

The company's turnaround strategy has yielded positive results, with its shares soaring over 90% since January. This impressive performance led to M&S's return to the FTSE 100 index, positioning it as the index's second-best performer.

For the half-year ending September 30, 2023, M&S reported an adjusted operating profit of £223.4 million, up from £171.4 million the previous year. However, its share of adjusted loss in Ocado (LON:OCDO) Retail spiked to £23.4 million.

CEO Stuart Machin attributed this growth to their strategic focus on providing trusted value and quality products. The company has implemented over 500 upgrades and invested £30 million in price reductions, leading to both businesses outperforming the market.

Additionally, M&S opened three full-line stores and refurbished six others as part of a store rotation initiative. A cost reduction program that saved £100 million and efforts towards modernizing its supply chain also played key roles in driving growth.

Despite these successes, M&S expressed concerns about future market conditions due to potential impacts on consumers from factors such as the highest interest rates in two decades and unpredictable weather patterns. These sentiments were echoed by Roula Khalaf, Editor of FT, and Clive Black at Shore Capital who upgraded his profit forecasts focusing on profit before tax and adjusting items.

InvestingPro Insights

InvestingPro's real-time data and tips offer valuable insights into the financial health of M&S. According to InvestingPro, M&S's P/E Ratio (Adjusted) as of Q3 2023 is a low 5.37, indicating that the shares are trading at a low earnings multiple. Furthermore, the company's Price / Book ratio stands at 1.34, suggesting that the market values the company at a level close to its book value.

InvestingPro Tips highlight that M&S has high earnings quality, with free cash flow exceeding net income and consistently increasing earnings per share. This is reflective of the company's strong performance and growth strategy. The company's valuation also implies a strong free cash flow yield, further reinforcing its financial strength.

However, it's important to note that the company's revenue growth has been slowing down recently, and its stock price movements are quite volatile. This suggests potential risks and uncertainties in the future.

InvestingPro offers an additional 10 tips related to M&S's financial performance and stock trends, providing a comprehensive view of the company's financial health and market performance. For more detailed insights, consider exploring InvestingPro's full range of tips and real-time data.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.