Marks & Spencer Reports Strong Half-Year Results

Investing.com — Marks & Spencer (LON:MKS) has reported stronger-than-expected half-year results, sending its shares higher.

At 4:13 am (0813 GMT), Marks & Spencer was trading 4.8% higher at £402.

For the first half of the fiscal year, the UK retailer delivered an underlying profit before tax (PBT) of £408 million, exceeding analyst consensus by about 14%.

This was driven largely by its food division, which has been a standout area for the company.

> “We think M&S has been making good progress with its Food business, helped by an improved value for money perception, while its Clothing offer has benefitted from a stronger digital offer, third-party brands and a better bought range, with improvements in style, quality and value perception,” said analysts at RBC Capital Markets in a note.

H1 sales totaled £6.5 billion, in line with previous forecasts, while underlying EBIT came in at £463 million, beating expectations of £427 million.

Underlying PBT for the period was £392 million, compared to the £365 million initially anticipated by analysts, with consensus pegging the figure at £359 million.

Adjusted EPS were 14.7p, comfortably ahead of the forecast of 11.5p. UK Food sales reached £4.2 billion, surpassing expectations of £4.1 billion, with EBIT of £213 million outpacing the £176 million forecast.

The clothing and home business also showed improvement, with sales of £2.0 billion.

While M&S’s international division showed a weaker performance, particularly in India, where results continued to lag, the retailer's share of losses from Ocado (LON:OCDO) Retail was in line with expectations, posting a loss of £16 million for the period.

M&S declared a dividend per share of 1.0p, consistent with its previous policy of paying one-third of the annual dividend at the half-year mark.

Despite some challenges in international markets, Marks & Spencer remains confident in its outlook. The company indicated that trading in the first five weeks of the second half of the year is on track, with further progress expected.

> “We think that Food performance has likely remained strong, but we expect some volatility in C&H given warmer weather in recent weeks,” said analysts at RBC Capital Markets.