Marks & Spencer first-half profits beat expectations

In the 26 weeks to 28 September, profit before tax and adjusting items rose 17.2% to £407.8m, coming in ahead of consensus expectations of £361m. Pre-tax profit was up 20.4% to £391.9m.

Statutory revenue grew 5.7% to £6.5bn, with food sales up 8.1% and clothing and home sales 4.7% higher.

Chief executive Stuart Machin said: "Executing our strategy to 'Reshape M&S for Growth' has again delivered an increase in customers, sales value and volume, market share, profit and returns. Both food and clothing have now delivered market share growth for four consecutive years.

"Central to our strategy is our vision to be the most trusted retailer, with quality products at the heart of everything we do. This is not something we take lightly, and our relentlessness in delivering customers the best quality, innovation, service and value only available at M&S underpins our trading momentum.

"The business remains in robust financial health. We have improved our return on capital employed to 15% and further strengthened our balance sheet, giving us the capacity and flexibility to invest for growth and deliver structural cost reduction, demonstrating our ability to deliver value for shareholders.

"The recent Budget's long-term impact on M&S, our suppliers, and our customers is for now uncertain. Meanwhile, we are confident and we remain on track and focused on what is in our control. We have the best Christmas food range I've seen in my time at M&S and the most stylish seasonal clothing offer yet, and we know customers are looking forward to celebrating Christmas with M&S."

At 0815 GMT, the shares were up 3.4% at 396.60p.

Aarin Chiekrie, equity analyst at Hargreaves Lansdown, said: "With Bonfire Night’s embers still cooling, Marks & Sparks lit up the market with a firework show of its own, delivering a dazzling set of first-half results. Its hot streak of better-than-expected results continued in the first half, driven by a strong uplift in food sales. High quality and value propositions have both been sharpened, helping the group record volume growth for four years in a row.

"In Clothing & Home, performance was strong, with continued growth reflecting improved customer perceptions of value, quality, and style. That’s by no means an easy feat and is a key reason for M&S being able to sell more than 80% of clothes at full price, far higher than many of its rivals.

"Credit where it’s due, M&S has done a great job breathing new life into the business over the past couple of years. Operational and strategic improvements mean the business is healthier than it has been in some time. Debt levels are moving in the right direction, and there’s plenty of cash being generated to help fund the group’s store rotation plan, which focuses on opening new locations in high-growth areas. There’s even cash left over to support recently reinstated dividend payments, which means M&S could once again appeal to income-focused investors."