M&S reports strong profit for first half

Marks and Spencer has returned to profit and said its turnaround plan was starting to pay off.

The high street retailer reported pre-tax profit of £187.3m for the six months to October, the first half of its financial year. That’s an increase from the loss of £87.6m for the first half of last year and profit of £158.8m in the same period two years ago, before the pandemic.

Chief executive Steve Rowe said that the company’s underlying performance was improving, with its main businesses “making important gains in market share and customer perception”.

UK food sales increased by 10.4% compared with the pre-pandemic period, while UK clothing and home sales were down 1.0% due to lower footfall, offset by strong online sales.

The company is optimistic about the future of its clothing and home operations, stating that the re-engineering of the business “is now demonstrating its potential to reverse years of decline”.

Rowe acknowledged the effect of the bounce-back from the pandemic “as well as the headwinds from the pandemic, supply chain and Brexit, some of which will continue into next year”.

To address supply chain issues, M&S said it had deployed several recruitment projects and incentives to attract new drivers. The company anticipates “significant supply chain cost increases” in the second half of its financial year with additional costs next year, but said its food business was “comparatively well placed” to deal with the challenges.

Looking ahead, M&S expects full-year pre-tax profit to beat expectations and has increased its guidance from £350m to £500m.