M&S has been upgrading its stores, clothing lines, and digital offerings as part of a major turnaround plan.
Online sales increased by 4.6%, and the online adjusted operating profit margin rose to 9.0% from 6.9% due to strong full-price sales and growth in click and collect, which helped lower fulfilment costs.
M&S said investments in its clothing and home supply chains are being reshaped to improve efficiency and reduce costs. The company is focusing on strategic suppliers, system upgrades, and an omni-channel logistics network. This includes consolidating denim supply and investing in online order fulfilment capabilities.
Senior apparel analyst at GlobalData, Pippa Stephens explained M&S’s focus on enhancing its third-party offering, like onboarding Adidas and Sweaty Betty to its Sports Edit in September as well as rolling Jaeger out to 20 more stores in October, is helping it attract more premium shoppers.
“M&S is right to continue investing in stores, as consumers increasingly appreciate the experience of shopping in-person again,” said Stephens.
Key results during H1 from Marks & Spencer:
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- Clothing & Home sales up 5.7% to £1.85bn.
- Adjusted operating profit £223.4m (2022/23: £171.4m) and margin of 12.1%
Despite the recent increase in performance, M&S’s CEO Stuart Machin expressed a note of caution about the upcoming year.
Machin pointed out that factors such as high-interest rates, decelerating price inflation, worldwide conflicts, and unpredictable weather could have an impact on the company’s trading.
The retailer also confirmed it would pay out the first dividend in four years to shareholders on 12 January 2024. This comes after its return to FTSE 100 (the London Stock Exchange’s top 100 companies based on shares), in August, after ‘better than expected’ clothing sales growth.
Machin said the company was now expecting a good Christmas with customers “responding positively” to its ranges.
The company added: “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.”