Marks & Spencer Earnings: Shares Surge

Restored dividend and large increase in profits appealed to investors

James Gard 8 November, 2023 | 9:49AM
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Marks & Spencer

Marks & Spencer (MKS) on Wednesday reported a big jump in first-half profits and restored its dividend for the first time since the pandemic.

The retailer’s shares rose 10% to 247p each on Wednesday morning, meaning they have more than doubled on a year ago. 

Adjusted pre-tax profit was up 75% on a year ago to £360 million, while statutory profit was 56% higher at £325 million. Revenue in the half-year to September 30 rose 11% to £6.13 billion from £5.54 billion a year earlier.

“Favourable market conditions, surprisingly resilient consumer demand and the effect of competitor exits from the market provided a solid backdrop,” the company said in a statement. This upbeat assessment from a UK high street stalwart is at odds with official measures of weaker consumer demand and economic slowdown. The Bank of England last week predicted flat economic growth in 2024, even if the UK dodges a recession.

Food sales were 15% higher than last year, which is impressive in the context of the cost of living crisis, where food prices have soared.

This is quite a turnaround story for Marks & Spencer, whose investment case was once hard to make. Zoe Gillespie, investment manager at RBC Brewin Dolphin, said: “Through a range of self-help measures, M&S is in a much better position than it was only a couple of years ago. The shares reflect that and are up around 125% since October 2022, but if M&S can keep its current momentum going there may still be room for growth. Whether consumer spending will remain as robust as it has been is outside of the company’s control, but it is taking the right steps to mitigate against any oncoming challenges.”

The restored dividend, though small at 1p per share, also buoyed investors. “The real talking point was the reintroduction of dividend payments, which should put a spring in investors’ steps. The yield is relatively low, but it marks a moment of significance for the group, and it’s a real statement of confidence around the outlook for the business from M&S’ management,” said Aarin Chiekrie, equity analyst at Hargreaves Lansdown.

As this is the half-way stage of the financial year, the company provided an outlook for the next six months. Profit is expected to be weighted towards the period just gone, with more investments in the coming months to reshape the business. This involves closing some stores and refreshing existing outlets.

Other financial measures were positive for investors, including free cash flow improving significantly and net debt reducing in the period.

Morningstar analyst Ioannis Pontikis says the fair value estimate for M&S is unlikely to change after this set of results:

“Marks & Spencer reported another robust set of results in its fiscal 2024 half-year … Given the widespread improvement in operating performance across the business and a stronger balance sheet, and as previously announced, the firm is restoring a modest annual dividend to shareholders (GBX 1 per share).

“Given the strong beat in top-line growth and profits, shares were up as high as 9% intraday, pushing the stock further into 2-star territory.”

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Marks & Spencer Group PLC234.40 GBX-1.01Rating

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James Gard

James Gard  is senior editor for


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