British retailer Marks & Spencer has today upgraded its profit outlook after a jump in demand for food and a surge in online clothes' orders indicated that its latest turnaround plan was starting to deliver.
Shares in the 137-year-old chain jumped 12% as the company said it was enjoying more than just pent-up consumer demand that followed months of lockdowns and disruption during the pandemic.
With a drive to improve the quality of products and heavy investment in technology and e-commerce, Marks & Spencer's clothing and home division revenue almost doubled in the 19 weeks to August 14 from a year earlier.
It was down just 2.6% on pre-pandemic 2019.
Food revenue jumped 10.8% on last year and 9.6% on the year before, with cost-cutting programmes helping to offset inflation and disruption in the supply chain from labour shortages.
"Assuming no further Covid-related restrictions on trading, at this early stage we expect adjusted profit before tax for the year to be above the upper end of previous guidance of £300-350m," M&S said in an unscheduled statement.
Its shares rose 12% to give it a market value of £3.2 billion. They are up 45% in the last year.
While the hard numbers showed that the strategy was finally delivering, the company's bosses had been hinting for months that trading was improving, with its chairman and CEO both saying that the pandemic had masked its true performance.
M&S, renowned for providing UK school uniforms, first suits for jobs and upmarket food, has also reshaped its store estate and built a venture with online supermarket Ocado.
It has also added third-party clothing and footwear brands to its website, which has helped to increase traffic and attract new customers. It also engaged in fewer promotions, more focused ranges and a smaller summer sale.
While store sales for clothing and home were down 19.8% on pre-pandemic numbers, it said its online sales were up 61.8%.
