Marks & Spencer “blew the bloody doors off” with its first half results, enthused one analyst, but the strong outperformance didn’t lead to upgraded forecasts.

Reporting its first half results for the 26 weeks to 30 September 2023, the retail group posted strong sales growth of 10.8% to £6.16bn.

M&S said it had benefited from “favourable market conditions” and “surprisingly resilient consumer demand” as well as the effect of competitor exits from the market.

Overall growth was largely driven by a 14.7% jump in food sales, with like-for-like sales up 11.7%. The retailer outperformed all mainline grocers on volume as customer numbers increased.

Clothing & home sales also grew 5.7% with like-for-like sales up 5.5%, supported by more confident buying and further improvements in style perceptions.

Notably, an improvement in core margin performance helped to boost profit before tax and adjusting items for the period by 75.3% – from £205.5m to £360.2m.

The stellar performance resulted in M&S reintroducing a symbolically notable dividend payment. Its 1p per share payout was its first since the Covid pandemic.

However, M&S declined to upgrade full year earnings expectations despite the strong performance. It noted “we are not relying on the favourable market conditions persisting”, and pointed to headwinds such as “the highest interest rates in 20 years, deflation, geopolitical events, and erratic weather”.

Commenting on the “staggeringly successful” numbers, Shore Capital analyst Clive Black said: “To misquote the great Michael Caine, M&S ’blew the bloody doors off’… Some seven years ago or more M&S commenced a journey for wholesale modernisation, literally all stones were turned in the business.

It has not been easy, but recent quarters are signalling the potential of this business under Stuart Machin’s tutelage, most evidently to notably expand in UK food whilst creating a materially more profitable non-food venture that is more stable and well-set.”

Given the healthy numbers retail analyst Nick Bubb noted: “It’s a surprise that the company hasn’t upgraded its full-year profit guidance, after smashing first half profit expectations.”

AJ Bell’s Russ Mould suggested the sober guidance could be reflective of M&S trying to “stop analysts getting over-excited and prevent them from setting too high a bar of expectations”.

He commented: “[The] outlook is perfectly prudent, but it runs counter to the traditional seasonality of the business. Further increases to consensus estimates look likely, as suggested by the gains in the share price following publication of the figures.”

M&S shares jumped 8.4% to 244.1p to hit their highest level since January 2022, within touching distance of their highest level since 2019. The shares are up almost 92% so far this year.

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