Marks & Spencer’s boss says he hopes for a “growth tale” in the years to come after the retailer, which has been revitalised, won more than 1 million new customers to boost its profits by 41%.
Stuart Machin, chief executive of M&S, stated that it was the “beginnings of a brand new M&S”. He added that there was “wind under our sails” and “confidence in our plan” because the pre-tax profit rose to £672.5m for the year ending 30 March.
The sales rose by 9.4%, to £13bn. This was due to an increase of 11.3% in grocery sales. The rise was not due to inflation alone, as the group spent £60m on keeping prices low.
Machin, the CEO of Machin, said that his retailer, with 240 full-line shops and 325 food outlets in its network, had won over “a broad church” of new clients. The retailer’s lingerie sales are at an all-time high, with a market share of 38%.
The shares of the group jumped nearly 6% in Wednesday’s morning trading after it announced it was paying its first dividend to shareholders since 2019. Machin stated that M&S is in “the greatest financial health in decades”, with reduced debts.
He stated that the company aims to save £100m by 2028 by improving efficiency, such as by working with fewer suppliers of clothing and by reorganizing the delivery process so there is less work behind the scenes.
After spending £180m on cost-cutting measures, the company saw a dramatic increase in profits. This included keeping staff numbers constant in stores despite increased sales and lowering delivery costs to stores following the acquisition of its distribution partner Gist. The company has also stopped selling furniture that needs two people to deliver.
M&S announced that it would be enhancing its five-year cost-cutting plan to £500m (£425m) by 2028. The company said this was achieved by reducing “structural costs and other efficiencies”. This, the company explained, relates to better deliveries which will free up employees to spend more time with customers. The company expects that other cost inflation will be largely offset by lower energy costs.
Machin, in an optimistic prediction for the coming year, said that M&S has increased its market shares in clothing and household goods and is “confident” of making further progress.
The upmarket grocery store said that it has benefited from the shift to eating at home instead of in restaurants. Sales of its “dine-in” offer have increased by over 40%. Shoppers also spent 34% extra on its lowest priced Remarkable Value range.
Clothing and home sales rose 5.3%. This was boosted by a 15% increase in holiday wear, such as swimsuits. Sales of the more expensive Autograph men’s range also increased 15%. Machin stated that M&S has tried to maintain clothing prices and will do so in the coming year after sales of basic items such as denim and knitwear have increased by over 10%.
He stated that the group would not be offering special discounts to Sparks card holders , like major chains such as Tesco and Sainsbury’s , because the group “didn’t wish to enter into trickery prices”. He claimed that short-term price reductions “force you to buy things you don’t want”.
M&S has increased its loss share at Ocado Retail (its online grocery-shopping joint venture) to £37.3m from £29.5m. M&S also reiterated that they do not expect to be required to pay any final installments for their share in the company, which was originally expected to amount to PS191m.
Machin, M&S International’s CEO, said that sales at the international M&S stores fell by 1% in constant currency terms to £719m. He added that they were “resetting their priorities” for a faster pace of progress.
Clive Black is a retail analyst with M&S broker Shore Capital. He said that the retailer “materially beat market expectations”, and had raised his expectations by about 12% for the coming year.
The group will open up to four clothing and home stores and nine new food shops in the coming year. This is down from six stores last year when they also closed seven stores and relocated five others.
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