Marks & Spencer bucks high street gloom with surprise upgrade: shares up 70% this year

High street bellwether Marks & Spencer has unexpectedly raised its outlook on the back of “strong trading”, telling investors it will deliver higher profits for the year as its turnaround bears fruit.

In an unscheduled trading update, the retail giant said it had increased market share in its clothing, homeware and food businesses over the past 19 weeks. It comes amid a challenging backdrop for the retail sector, as higher mortgage costs and household bills have put pressure on shoppers’ budgets, though M&S still appears to be gaining from the demise of rivals such as Debenhams and Topshop owner Arcadia.

In its latest update, M&S recorded an 11 per cent-plus sales rise in its food operation, while its clothing and home business saw sales grow by “over 6 per cent”. The clothing and home arm reported particularly “strong” growth in its stores, with “subdued growth” online. It added that it sold more products at full price, meaning less stock went into its latest sale than previously planned.

M&S said its results for the six months to September, which are due to be released on November 8, are expected to be ahead of earlier forecasts. It told investors: “There remain considerable uncertainties about the economic outlook, and there is a risk that the consumer market will tighten as the year progresses. Nevertheless, 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.”

Established in 1884, M&S is one of the most familiar names on the British high street though its fortunes have fluctuated over the years.

Victoria Scholar, head of investment at Interactive Investor, said: “Shares are trading sharply higher, thanks to its improved profit outlook, lifting the stock’s year-to-date gain to over 70 per cent, making it a standout winner on the UK stock market this year.

“The brutal demise of the high street has separated the winners from the losers with a number of high-profile casualties and some standout gainers. Next and M&S are among those in the latter category, allowing both to up their outlooks. M&S has been undergoing a fruitful turnaround under the watch of CEO Stuart Machin, involving revamping its store estate and investing in new technologies.”

Charlie Huggins, manager of the Quality Shares Portfolio at Wealth Club, noted: “Following on the heels from Next’s recent profit upgrade, M&S has also announced that it expects profit for the year to be above expectations. This is evidence that the UK consumer is still spending, despite the gloomy economic headlines.

“The results are also testament to the group’s progress against its strategy, launched last year. This aims to improve brand perception and designs, reduce discounting, and improve the online offering, while taking a knife to costs and instilling a more entrepreneurial culture.”

Last year, M&S said it was speeding up a major shake-up of its stores estate, which will result in the closure of 67 larger shops as part of long-term plans to axe 110 stores under a sweeping overhaul led by previous boss Steve Rowe. A number of stores have closed in Scotland in recent months, though some food halls have been opened and others overhauled.

M&S shares were up more than 8 per cent in morning trade.