Marks and Spencer Groups FY23 for year ending 30 Mar shows profits up by a substantial amount with its key food sales up by double figures with clothing and home also with big growth, as it hits its second year of its plan to “Reshape for Growth”.
The Marks and Spencer full year results are subtitled “The Beginnings of a new M&S” and the figures back that up particularly for its food sales.
Overall sales for the group were up 9.3% from £11,931.3m to £13,040.1m and operating profits before adjustments were up 33.8% to £838.6m from £626.6m, with profit before tax Profit before tax up 41.4% to £672.5m from £475.7m.
FY23 Food sales have benefitted from the upgrading of over 1,000 products and the addition of 1,300 new lines with with £60m invested in price. Sales were up 13% to £8,158.8m from £7,218m, with profits for the division up by 59.4% to £395.3m from £248m in 2022/23.
Clothing and home which has added lots of third-party products to its bow over the last few years has also increased, but by just 5.3% to £3,910.7m from £3,715m. However profits increased by 24.4% to £402.8m from £323.8m in 2022/23.
Online clothing and home sales also showed a large uptick with an increase of 7.8% and accelerated growth in the second half. Third-party brand sales grew 33%, with new partners like Adidas, Puma, and Sweaty Betty, supporting the growth of average basket value.
Seperately revenue at Ocado increased 11.2% to £2.47bn and adjusted EBITDA was £26.8m (up from a loss of £15.1m in 2022/23). While adjusted EBITDA improved, M&S group’s share of adjusted loss increased to £37.3m from £29.5m due to higher interest costs on shareholder loan funding and a write off of a deferred tax asset in the current year.
Talking about the results of the Reshape for Growth plan on its food and clothing & home divisions Stuart Machin, Chief Executive said. “Both businesses have now delivered 12 consecutive quarters of sales growth and this trading momentum gives us wind in our sails, and confidence that our plan is working. We are becoming more relevant, to more people, more of the time.”
Machin also paid tribute to the workforce who he described as “The soft wiring of the organisation” saying “who we are and how we show up – is changing and we are building a culture where everyone is sleeves rolled up, M&S first, closer to customers and closer to colleagues.”
As well as improving the quality of the food, and the choice offered Machin is also trying to reduce costs and believes there is still “substantial further scope for structural cost reduction.” Adding “With continuing cost headwinds, notably from investment in colleague pay, the structural cost programme is critical to our profit progression. The £180m delivered to date has supported a 0.8% pt. reduction in UK operating costs as a percent of sales. We are increasing the objective for cost reduction from £400m to £500m, to be delivered by 2027/28. This will support continued delivery of our target operating margins of over 4% in Food and over 10% in Clothing & Home, as well as further investment in quality and value.”
