Marks and Spencer has reported robust results for the FY ended 30th March 2024, achieving a PBT and adjusting items of £716.4m (from £453.3m in 2022/23), a statutory profit before tax of £672.5m (from £475.7m in 2022/23), and ending the year in “the strongest financial health since 1997”.
Clothing & Home sales were up +5.3%, representing “market-leading share growth”.
The retailer says that, over the past two years, the strategy of reshaping M&S has delivered growth in sales, market share, margins, return on capital and free cash flow, yet the programme remains in its early stages, with “substantial scope for further operational efficiency and sustainable growth”.
Online sales grew by +7.8%. In April, the retailer announced its intention to cease selling larger furniture items in-store, shifting the emphasis to online. “Our long-term objective for M&S.com’s share of Clothing & Home sales is to grow towards 50%, having increased from 22% five years ago,” states the retailer.
"We remain laser-focused on the growth opportunities across women’s, men’s, kids, and core Home. As part of this, we are simplifying the bulky ‘two-person’ delivered furniture operation. This will impact annual online sales by c.£80m, but will release space and resources to expand the growing core Home business.”
Store sales increased +4.1%, with good performances from shopping centre and retail park stores. M&S opened six full-line stores, and closed 12, of which five were relocations. In 2024/25, the retailer plans to up to four new full-line stores, and is implementing a refreshed renewal format.
The business made structural cost savings of £180m, with its 5-year objective increasing from £400m to £500m. It also made a significant investments in staff pay – including its biggest-ever investment in frontline staff wages – which will be funded by “structural cost reductions and other efficiencies. Other cost inflation will largely be offset by reduced energy costs”.
CEO Stuart Machin comments: “Two years into our plan to Reshape for Growth we can see the beginnings of a new M&S. Food and Clothing & Home grew volume and value share ahead of the market and sales increased across stores and online. 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.
“We remained unswerving in our commitment to trusted value, offering customers exceptional quality at the very best price. In Clothing & Home, style perception continued to improve and our decisive lead on quality and value perception was extended. Our commitment to ‘First Price Right Price’ supported full price sell through ahead of last year.
“Investment in store rotation and the end-to-end supply chain is beginning to pay off. New stores and renewals are performing ahead of forecast and attracting new customers. Supply chain modernisation supported margin growth across both businesses. In Clothing & Home, stock flow improved enabling historically low levels of stock cover, and in Food, Gist is delivering payback ahead of expectations.
“Disciplined capital allocation underpins our plan, and the financial health of the business is as strong as it’s been in decades. Free cash flow has increased, financial net debt has been eliminated, and ROIs have improved. The strength of the balance sheet, coupled with the sustained improvement in performance, means we have the headroom and confidence to invest for future growth as well as introduce a 3p dividend.
“It has been a good year, and I would like to thank all of our colleagues for their hard work and commitment. However, there remains much work to do and that’s a good thing as every challenge is an opportunity for growth. The soft wiring of the organisation – 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. But culture change is a job that is never ‘done’ and it is critically important to reshaping M&S.
“We have made progress on ‘hardwiring’ sustainable change – how and when we execute our strategic priorities – with progress in store rotation and supply chain. However, we need to move faster and be ruthlessly challenging on the areas where progress has been slower, building a more effective digital and technology infrastructure, accelerating the move to a truly personalised customer experience, and resetting priorities in International.
“We have a clear plan, a clear vision for the future, and there is so much opportunity ahead of us. We are at the beginnings of a new M&S.”
Rachel Higham is set to join as chief digital and technology officer in June, and Mark Lemming has been promoted from running the Clothing & Home supply chain to international MD.
