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Marks & Spencer has ”so much to do” after its profits soared once again ahead of expectations.
Pre-tax profits surged 17% to £408m in the six months to September 2024, propelled largely through its food business which grew 8%. This beat expectations of £360m, according to a Bloomberg survey of analysts.
Its share price rose 5% in Wednesday’s early morning trading.
However, those profits will now come under pressure with major supermarkets facing hundreds of millions in extra costs after the government announced huge tax rises last week.
Chancellor Rachell Reeves said businesses will have to choose whether they absorb that through efficiency and productivity gains, lower profits, or lower wage growth.
M&S CEO Stuart Machin said the budget’s long-term impact on M&S “is for now uncertain.”
Revenue at the FTSE 100 company grew 6% to £6.5bn, buoyed by its food and clothing divisions both delivering market share growth for the fourth consecutive year.
In food, this growth was driven by produce, meat and dairy, and a strong programme of innovation. Food’s market share was up 30bps to 3.7% for the 12 weeks to 29 September 2024.
“The easy thing to do today would simply be to say that these are good results, but that wouldn’t be the right thing to do,” said Machin.
“In the spirit of being positively dissatisfied, we have so much to do over this year and beyond. Despite our strong trading momentum, there is much more opportunity for future growth and that energises us.”
M&S has been closing less profitable clothing stores and opening more of its popular food shops with the aim of having 180 full-line stores and 420 food stores by 2028. This renewal programme is now picking up pace with 10 new locations secured in recent weeks, it said.
The business said it delivered its target operating margins of over 4% in food and over 10% in clothing and home, with structural cost savings from early-stage modernisation of its supply chains largely offsetting the impact of operating cost inflation.
Morning update:
Domino’s Pizza has reported a return to positive sales growth following efforts to improve the customer experience.
Total sales rose 3% to £375m in the third quarter, after a 0.9% drop in the second quarter. This was led by delivery orders up 6.6% while collections fell.
Dominos has sought to improve its customer service this year and has reduced its average delivery times by 60 seconds to 24 minutes.
It has opened 34 new stores so far in 2024 with 20 different franchise partners.
Irish nutrition company Glanbia has announced a major restructure of its nutrition business.
Glanbia Nutritional, a major supplier of ingredients to food manufacturers, will be split into two entities, Health & Nutrition and Dairy Nutrition.
“The new structure is designed to further streamline our business, sharpen our focus on our end use markets, and position ourselves for the next phase of growth,” said CEO Hugh McGuire.
The business posted revenue growth of 6% in the third quarter, in line with guidance. This was led by volume growth driven by protein brands Optimum Nutrition and Isopure, as well as premix and protein solutions
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