M&S store

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Marks & Spencer has declared the start of a new era as its turnaround plan delivered bumper profits and sales growth.

The high street retailer’s food offering recorded “market-leading” volume growth in the year ended 30 March 2024, helping sales in the division increase by 13% to £8.2bn, with like-for-like growth of 11.3%.

Sales on its ‘Remarksable’ range grew 34% as M&S lowered prices on more products and also ‘dropped and locked’ prices on a further 90 lines.

Adjusting operating profit in food soared 59% to £395.3m.

Overall group revenues rose 9.3% in the year to £13bn, with the once-troubled clothing & home division also reporting “market-leading” share growth as sales grew 5.2%.

Group adjusted pre-tax profits jumped 58% to £716.4m on the back of the performance.

However, bottom line profits were dragged down to £672.5m as a result of a £133.7m pre-tax loss at Ocado Retail, in which M&S holds a 50% share.

M&S’ £67m share of the loss was broken down by the group into £37.3m included in the adjusted profits figure and the other £29.7m logged as a one-off cost and mostly attributable to the closure of Ocado’s Hatfield customer fulfilment centre in 2023.

Revenues at Ocado Retail increased 11.2% to £2.5bn and EBITDA moved from a £15.1m loss to a £26.8m profit.

CEO Stuart Machin said: “Two years into our plan to ‘Reshape for Growth’ we can see the beginnings of a new M&S. Food and clothing & home grew volume and value share ahead of the market and sales increased across stores and online.

“Both businesses have now delivered 12 consecutive quarters of sales growth and this trading momentum gives us wind in our sails, and confidence that our plan is working.

“We are becoming more relevant, to more people, more of the time.”

He added there was “so much opportunity ahead of us” thanks to “a clear plan” and “a clear vision for the future”.

In its outlook for the new financial year, the group said it was confident of further progress in 2024/25 and beyond.

Shares in M&S soared 9.5% to 299.7p as profits beat analyst expectations. The stock is up more than 80% over the past year and is trading at a five-year high.

Morning update

Food inflation has continued its downward trajectory with significant easing recorded by the Office for National Statistics (ONS) in April.

The rate of food inflation fell by 1.1 percentage point to 2.9% in the year to April - its lowest level since November 2021 and the 13th month in a row the figure has fallen.

The annual rates for most types of food product eased between March and April 2024. The main downward effects came from a combination of bread and cereals, meat, dairy products, vegetables, and soft drinks. In each case, the annual rate was the lowest seen for at least two years.

It helped push down the UK headline rate of inflation to 2.3% in April, compared with 3.2% in March and the lowest level in almost three years. However, the main driver this month was falling gas and electricity prices.

Prime minister Rishi Sunak said the latest figures marked “a major moment for the economy”, with inflation back to normal.

“Brighter days are ahead, but only if we stick to the plan to improve economic security and opportunity for everyone,” he added.

FDF CEO Karen Betts said: “The continued fall in food and non-alcoholic drink inflation is good news for households and for food and drink businesses. There remain risks, including geopolitical events impacting shipping and oil prices, and changing weather patterns impacting harvests globally. But manufacturers and the food system more broadly are continuing to shield shoppers successfully from this volatility.

“We continue to actively engage government to ensure they play their part in ensuring food and drink price inflation continues to fall. Plans for ‘Not for EU’ food labelling in Great Britain will push up prices, inhibit growth and cause a drag on investment in our sector. New border checks are pushing up costs particularly for smaller manufacturers and food businesses, and chaotic government guidance is heaping pressure on business owners. The government has a duty to shoppers to fix these issues in a constructive way, and to ensure they are not responsible for self-inflicted economic damage in communities.” 

Losses have widened at under-pressure brewer Adnams as it continues to explore options to secure its future.

Higher costs pushed operating losses to £2.5m in the 12 months to 31 December 2023, up from £1.2m in 2022, while pre-tax losses moved from £2.3m to £4m.

However, sales grew 3% to £66.3m thanks to stronger demand in on and off-trade channels in second half of year.

Year-on-year volumes increased 3% in the second half of the year and by 11% in the first quarter of 2024.

Off-trade sales climbed 14% supported by new national listings with several major retailers, wholesalers and pub companies.

Adnams has downplayed press speculation in recent months that it is seeking sell the business outright.]

This morning, the group confirmed it was continuing to explore a range of options “to fund its future growth plans” and has received “an encouraging response” to the process.

“The board’s preferred option remains the raising of additional capital from another party and/or the sale of freehold assets to return capital to the company. However, no decision has yet been taken.”

The FTSE 100 dropped by 0.6% to 8,365.87pts this morning despite the big gains for M&S.

Early losers in food & drink so far include Reckitt Benckiser, down 2.2% to 4,439p, and Just Eat Takeaway, down 1.9% to 1,138p.

Yesterday in the City

The FTSE 100 dipped by 0.1% to 8,416.45pts yesterday.

Greencore shares rocketed 19% higher to 165.6p as a transformation plan took hold. The sandwich maker also launched a share buyback and upgraded profit forecasts for the year.

Investors were also impressed with progress made by Naked Wine in its turnaround, with shares up 9.6% to 57p following a pre-close trading update.

Contrastingly, SSP Group slumped 9% to 190p after it missed profit expectations in the first half.

Cranswick clawed back early losses to end the day down just 0.9% to 4,385p following the publication of full-year results in which the meat processor saw double-digit rises in revenues and profits.