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M&S has revised its annual profit forecast upwards due to strong sales in its clothing and home products, as well as food which hit an 11% growth during the 19 weeks to 12 August.

The retailer said its operating margins have continued to be robust, driven by strong store performance and enhanced by its store rotation and renewal programme.

Despite wetter weather in July dampening summer retail sales in the UK, with the likes of Matalan displaying a drop in revenue, M&S had an increase in its profits, leading to an increase in its sales growth expectations for H1 FY2023 and a 9% increase in its share price in early trading, according to GlobalData retail analyst, Joe Dawson.

Meanwhile, Charlie Huggins, manager of the quality shares portfolio at Wealth Club credits M&S’s results to the strategy it implemented last year.

In November 2022 M&S announced plans to “accelerate migration into growth channels – online and high performing modern stores – whilst at the same time bringing forward plans to streamline the business and reduce costs.”

M&S’s strategy continued to boost the company’s performance earlier this year with Sofie Willmott, analyst sector head of health & beauty at GlobalData attributing it to the retailer’s positive Q3 numbers at the beginning of the year.

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By GlobalData

In terms of its most recent update Huggins suggests the plan is continuing to resonate with consumers as M&S is continuing to increase its market share in clothing and home.

Huggins notes that M&S is hot on the heels of British retailer, Next, which “continued to surprise” with robust Q2 trading figures resulting in it issuing a second revised profit guidance within just over six weeks.

M&S’s raised outlook adds to the growing pool of evidence that the retailer is delivering on its long-promised recovery after job cuts and store closures and following the impact of the pandemic.

Dawson mentions the slowdown in inflation and the promise of warmer weather boosted M&S’s holiday range sales between April and June with “increases in beachwear, linen and swimwear sales year on year as shoppers prepared for holidays abroad.”

M&S cautions, however that there is still “considerable uncertainties about the economic outlook, and there is a risk that the consumer market will tighten as the year progresses,” as there still remains macro-economic headwinds in the UK, notably inflation remains high even with an increase in wages.

Shore Capital analysts Clive Black and Darren Shirley suggest “self-help, self-improvement, continued self-confidence and momentum” will help M&S on its upward guidance.

“If the legs keep whirling in the right direction, then more material appreciation could follow, along with a return to the FTSE 100,” the analysts add.

Dawson notes the retailer also benefited from its collaboration with England’s Senior Women’s team to make a range of tailored pieces that have been worn by the Lionesses throughout the Women’s World Cup.

M&S said in its statement: “We now expect the outcome for the year to show profit growth on 2022-23, and the interim results to show a significant improvement against previous expectations.”