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(Alliance News) - Marks & Spencer Group PLC on Wednesday reported a rise in first-half profit and drew attention to the "stand-out performance" by its Clothing arm, which often has been seen as its weakest offering.
Meanwhile, the company announced it plans to save over GBP150 million in costs in financial 2024.
Group revenue in the half-year that ended October 1 rose 8.5% annually to GBP5.54 billion from GBP5.11 billion.
Pretax profit climbed 11% to GBP208.5 million from GBP187.3 million.
"Trading in the first half has been robust with both businesses growing ahead of the market, reflecting the beginnings of a reshaped M&S. In Food, investment in trusted value has driven top-line growth but short-term profit has been reduced, although the acquisition of Gist gives us control of one of our biggest cost and efficiency levers. Clothing has delivered a stand-out performance from a market leading position in value with improving style credentials," Chief Executive Officer Stuart Machin said.
M&S completed the purchase of Gist Ltd, the principal contract logistics provider to M&S Food, at the end of September. It made an initial cash payment of GBP145 million and will pay up to GBP110 million more depending on the sale of freehold properties.
UK Clothing & Home sales rose 14% year-on-year, while UK Food sales climbed 5.6%. "As we enter our traditionally strongest quarter, the business continues to trade well. Trading in the first four weeks of the second half is in line with forecasts, with Clothing & Home sales up 4.2%, Food sales up 3.0% and International up 4.1%," M&S said.
Meanwhile, net debt was reduced by 7.0% to GBP2.93 billion at the start of October from GBP3.15 billion a year ago.
Looking ahead, M&S said trading in its traditionally strongest third quarter has been well and in line with forecasts for the first four weeks, with Clothing & Home sales up 4.2%, Food sales up 3.0%, and International sales up 4.1%.
M&S expects adjusted pretax profit in financial 2023 to be in line with the guidance it provided at the time of its financial 2022 results. At that time, it said it had entered the new financial year with a lower adjusted profit base and "we do not currently expect to progress from this lower profit base in 2022-23", due to higher costs and consumer uncertainty.
Looking further ahead, the company aims to reduce costs by GBP150 million in financial 2024 via technology-driven efficiency gains, cost reduction, simplification and supply chain efficiency.
Marks & Spencer shares fell 5.1% to 111.05 pence each on Wednesday morning in London.
By Tom Budszus; tombudszus@alliancenews.com
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