Shares in Marks & Spencer have surged by more than 10 per cent after the embattled retailer issued a surprise profit upgrade, its first since the start of this century.
In an unscheduled trading update, the company noted that clothing and home sales rebounded to just below pre-pandemic levels during the 19 weeks to August 14. However, this was driven by a 62 per cent increase in online purchases, whereas sales in its stores are still almost 20% lower than in 2019.
Revenue across its clothing and home division rose by 92% during the period as the relaxation of coronavirus restrictions that shut down much of its estate during the past 18 months have eased. Compared to 2019, sales were down 2.6%.
Its food division also put in a strong performance, with sales up 10.8% on the same period a year earlier and 9.6% higher compared to 2019.
Though noting there remains “substantial uncertainty” about the continued strength of consumer demand, M&S said it was an encouraging performance providing confirmation that its “Never the Same Again” transformation programme is on track. As a result, it predicted that full-year profits will beat previous guidance of £300-£350 million.
“Despite variable location performance, overall trading has been ahead of the market,” the company said. “Cost-reduction programmes are helping to mitigate cost inflation and disruption in the supply chain, and the cost of increased colleague absence in the period.”
The retailer said in May that it would accelerate its store closure plan after posting a £201m loss for the year to March 27, its first annual loss in 94 years as a listed company. It has shed approximately 7,000 staff as the pandemic has hammered the UK’s high streets.
Shares in M&S were trading 10.8% higher as of 2pm.