M&S Shares Shine with a 56% Surge in Pre-tax Profits

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Marks & Spencer (M&S) has experienced a 9% surge in its shares as it announces the resumption of dividend payments for the first time since the onset of the Covid-19 pandemic. The positive news is attributed to robust first-half results, surpassing expectations, with pre-tax profits reaching £326 million, marking a significant 56% annual increase for the six months ending on September 30.

M&S attributes its success to favorable market conditions and the exit of competitors from the market. The company’s shares have surged by 90% since January, leading to its re-entry into the FTSE 100 index. M&S now stands as the second-best performer in the blue-chip index, following Rolls-Royce.

Alistair Osborne, writing for The Times, notes that both M&S’s food and clothing divisions are in their best condition in years. The food sector, traditionally strong, has benefited from upgrades to 500 products and a £30 million investment in reducing prices across 200 products while maintaining lower prices on 150 additional items. These initiatives have resulted in market-share gains, particularly from competitors like Waitrose, and an impressive 11.7% increase in underlying sales. The clothing section has experienced a 5.5% rise in like-for-like sales, and operating margins have surged from 9.8% to 12.1%. M&S’s strategic move away from promotions has also contributed to this success.

M&S has emerged as the leading retailer of women’s clothing in the UK, according to Ellie Violet Bramley in The Guardian. The brand, previously associated with “frumpy” or “inoffensive” clothing, has successfully captured the attention of female customers who seek a balance between fashion-forward yet affordable options. Credit for this transformation is given to Maddy Evans, the director of womenswear, who has enhanced the brand’s understanding of its customer base. M&S now fills the gap between high-end but costly retailers and those offering less durable clothing. Third-party brand partnerships and improvements to the supply chain have expanded M&S’s demographic reach, making it a standout success in the UK retail landscape.