M&S ‘fundamentally changed’ as full-year profits climb and sales rise

Alongside its full-year results, Marks & Spencer confirmed it would fully exit Russian following negotiations with its licensee, which would incur costs of £31m.

The retailer’s profit before tax and adjusting items rose 29.7% to £522.9m in the 52 weeks to April 2 2022, in comparison with pre-pandemic levels.

Marks & Spencer’s revenue during the period rose 6.9% to £10.9bn, driven by a 10.1% rise in sales of M&S Food.

Although partner Ocado Retail’s sales declined 4% in the year, M&S products comprised over a quarter of shoppers’ baskets during the period, and the retailer said that it is investing in increased capacity with the online grocer which “has the potential to grow the business by over 50% when fully ramped up”.

The retailer’s clothing and home sales also rose 3.8% overall, with full-price sales up 28.5% compared to pre-pandemic levels. This was driven by strong online growth, with ecommerce now comprising 34% of the division’s overall sales and 11% of online orders fulfilled from stores. The retailer has reduced the depth of its range 20% over three years, which drove sales in core categories and reduced discount levels. 

International sales more than doubled on pre-pandemic levels to £250m, but the retailer flagged that this division would be impacted by its exit from Russia.

M&S said that its value perception for shoppers, coupled with its customers having “a degree of cushion” from the cost of living crisis due to increased saving during the pandemic, and the return of travel, leisure events and weddings, meant it was well-positioned to “mitigate” the effects of inflation in its upcoming financial year.

However, the retailer said that the impact that its exit from Russia would have on international sales, combined with increased investment in Ocado Retail and the end of business rates relief means the business starts its current financial year “from a lower adjusted profit base” which “we do not currently expect to progress from”.

Rowe said: “When I took over the reins at M&S six years ago, I committed to tackling the underlying issues that had eroded the strength of the business and building the foundations for future growth. For me, what is important about these results is not just the restoration of profit and strong cash flow; it is that they demonstrate that M&S has

fundamentally changed. While there is much more to do, the business has moved beyond proving its relevance and has the opportunity for substantial future growth.”