If anyone still needs ­convincing M&S’s ­turnaround is working, this week’s annual results should do the trick.

In what one analyst called a “glittering set of results”, the food business notched up market-leading volume growth in the year to 30 March, increasing sales by 13% to £8.2bn, with like-for-like growth of 11.3%, while overall group revenues rose 9.3% to £13bn, and adjusted pre-tax profits jumped 58% to £716.4m.

M&S Food’s in-store market share rose from 3.6% to 3.7%. Including M&S on Ocado, share increased from 4% to 4.2%.

Customer perception of value and quality both improved, according to M&S, as over 1,000 food products were upgraded and 1,300 new lines launched, while £60m was invested in lowering prices, including its ‘Remarksable’ value range, sales of which rose 34%, while ‘Dine-In’ range sales grew by over 40% as people traded down from eating out..

Sales growth came through “switching from a broad spectrum of retailers”, says M&S CEO Stuart Machin, while the store renewal programme – which led to six new full-line stores and eight bigger standalone Food stores – has been “attracting new customers and driving bigger baskets in food especially”, he says.

Ocado losses

The only dampener to the bottom line by M&S’s half of a £133.7m pre-tax loss by Ocado Retail.

One of Ocado and M&S’s better co-ordinated pieces of marketing has been a recent YouTube campaign hailing their “perfect marriage”.

And like some marriages, it could be heading for a financial settlement in court, over how much M&S should pay of a £191m final instalment in their £750m joint venture.

Machin says Ocado Retail missed a “binary” earnings target and “we continue to rate the accounting value as zero”. It comes after Ocado said in March their contract provided for the target to be adjusted in light of the pandemic, and it was willing to sue.

“We have a slight disagreement on the contingent payment, and the discussions are ongoing, but that does not stop us with the day-to-day running of the business,” says Machin.

Despite Ocado Retail’s continued losses, Machin now strikes a slightly more positive note on its progress than in previous recent trading updates.

“Ocado is in the early stages of sales growth and we’re quite encouraged,” he says. “M&S products grew [sales] 15% in the last quarter. We have 4,800 products on Ocado, 20% more than this time last year.

“And actually, in the last few weeks, M&S products were 30% of the basket.”

Machin is not the only one sounding more optimistic. In November, an M&S quarterly Family Matters survey suggested customers were worried about high interest rates and geopolitical events. They are now “definitely feeling more positive” says Machin. “I think the [ONS] inflation numbers that just came out give people some reassurance.”

Growing customer confidence is fuelling “growth in some of our new innovation”, an area which this year promises to be “exciting”, says Machin, including a relaunch of the premium Gastropub range.

“In food, there are some brilliant new ranges coming out. Some of it is simple things like fresh pizza. I’ve never had pizzas like I had in the tasting we did a few weeks ago. I’m incredibly excited about the range – balanced with good fruit & veg and salad.”

Tricksy prices 

While the results of an exclusive survey for The Grocer this week suggest shoppers like instant loyalty discounts, Machin dismisses them as “tricksy prices”.

Having scrapped a Sparks Prices pilot last year, M&S is now working on ways of harvesting more data from its 19 million members through personalisation, he says.

“We’re looking at how we get the best information on our customers so we can give them a truly personalised service.

“That might mean how we tailor new products, events. What I don’t want to get into is tricksy prices, where if you’re on Sparks, you get something for a better price just for that day or that one week, and we’re forcing you to buy something you might not even want.”

An update is due in M&S’s capital markets day in autumn.

In the meantime, M&S seems to have put to bed lingering doubts from analysts about its turnaround.

“The turnaround story has been years in the making and it finally looks like the retailer has cracked it,” says AJ Bell investment director Russ Mould.

“Food products are flying off the shelves and it’s at long last struck a chord with shoppers on the clothing side.

“It’s back on top and 12 ­consecutive quarters of sales growth cements its new-found status as the UK’s retail champion.”