Marks & Spencer has today nudged up its profit outlook after it reported a strong Christmas performance, particularly in food, where it outperformed the market.
M&S, Britain's most famous stores group which is recovering from a decade of decline, said it now expected full-year profit before tax and adjusted items to be at least £500m compared to previous guidance of about £500m.
It said food sales increased 12.4% against its pre-pandemic performance two years ago in the 13 weeks to January 1, beating market forecasts of 10% growth.
Clothing and home sales rose 3.2% on the same basis, also surprising on the upside. The market had expected a 0.9% fall.
"Trading over the Christmas period has been strong, demonstrating the continued improvements we've made to product and value," chief executive Steve Rowe said.
He said food had outperformed the market over both 12 and 24 months, while clothing and home had delivered growth for the second successive quarter, supported by more full-price sales.
The update provides evidence that one of Britain's most elusive turnarounds could finally materialise. M&S's shares have nearly doubled over the past year.
Meanwhile, Marks & Spencer said there were inflationary pressures in both food and clothing, but it was working with its suppliers to mitigate as much impact for customers as possible.
Chief Financial Officer Eoin Tonge said inflation in the food market in the 12 weeks to December was 2.7%, rising to 3.5% in December.
"In those 12 weeks, we were behind the market," he said.
In clothing & home, he said consumers were not seeing price rises at the moment, but pressure in costs for freight and raw materials was building.
"There is an expectation that there will be a similar level of inflation in clothing as well, but that will only start to come in the coming months," he said.
He said M&S had worked with its suppliers to improve its value proposition but it was "inevitable" that some of the inflation coming into the marketplace would be passed on.
