* First half profit 269.4 mln stg
* Raises full year profit guidance to about 500 mln stg
* Says "hard yards" of driving change are working
* Shares rise as much as 21%
(Adds detail, CEO comments, updates shares)
By James Davey
LONDON, Nov 10 (Reuters) - Marks & Spencer on
Wednesday beat forecasts for first-half profit and upgraded its
earnings outlook for the second time this year, sending its
stock soaring on bets that one of Britain's most elusive
turnarounds could finally materialise.
Shares in M&S jumped as much as 21% after the retailer said
it expected full-year profit before tax and adjusting items to
be about 500 million pounds ($677 million) compared to previous
guidance of over 350 million pounds.
However, it cautioned that cost pressures will become
progressively steeper and said the reintroduction of dividend
payments in the current year remained unlikely.
"Given the history of M&S we've been clear that we won't
overclaim our progress," Chief Executive Steve Rowe said.
"But ... it is clear that underlying performance is
improving, with our main businesses making important gains in
market share and customer perception. The hard yards of driving
long term change are beginning to be borne out in our
performance."
Rowe and chairman Archie Norman are overseeing a
restructuring of the 137-year-old group which is focused on
improving the quality and value of its clothing and food
products, an overhaul of its store estate and investing in
technology and e-commerce, including a venture with online
supermarket Ocado.
The profit upgrade, only the second in at least two decades
after one in August, is the strongest sign yet that the latest
turnaround effort is starting to bear fruit after years of false
dawns.
The company made a profit before tax and adjusting items of
just 41.6 million pounds in the 2020-21 year.
The overhaul is happening in conjunction with supply chain
disruptions that are causing price headaches for companies as
the global economy reopens from pandemic restrictions and Rowe
warned there remained a "substantive to do list."
British retailers are grappling with delays in their
international supply chains that are compounded by labour
shortages in the UK transport and warehousing networks.
Last week rival Next warned that stock availability
remained "challenging".
M&S made profit before tax and adjusting items of 269.4
million pounds in the six months to Oct. 2, ahead of analyst
forecasts of 205-264 million pounds. It made a loss of 17.4
million pounds in the same period last year.
M&S said trading for the first four weeks of its second half
has been consistent with growth rates reported in the second
quarter and ahead of management expectations. It said it
expected the strong demand to be sustained in the near term.
First half food sales increased 10.4% on 2019, before the
pandemic impacted trading, while clothing and home revenue was
down 1%, with full price sales up 17.3%.
Clothing and home online sales grew 60.8%, representing
34.4% of total sales.
M&S cut its net debt to 3.15 billion pounds.
The stock was up 11.3% at 1105 GMT, extending 2021 gains to
59%.
"Credit is due to the management team for turning around
something that was heading toward being uninvestable to being a
potentially attractive recovery story," said John Moore,
investment manager at wealth manager Brewin Dolphin.
($1 = 0.7414 pounds)
(Reporting by James Davey; Editing by Kate Holton, Paul Sandle
and Carmel Crimmins)