Britain’s M&S raises turnaround hopes with profit beat and upgrade

British retailer Marks & Spencer (MKS.L) on Wednesday beat forecasts for first-half profit and raised its full-year outlook, adding to evidence that its latest attempt at an elusive turnaround is delivering.

The 137-year-old clothing and food group, one of the biggest names in British retail, said it made profit before tax and adjusting items of 269.4 million pounds ($363.4 million) in the six months to Oct. 2 versus analyst forecasts of 205-264 million pounds. It made a loss before tax and adjusting items of 17.4 million pounds in the same period last year.

M&S raised its forecast for full-year profit before tax and adjusting items to about 500 million pounds from previous guidance of over 350 million pounds.

The profit upgrade is only the second from M&S this century and follows one in August.

The first-half outcome was also ahead of the profit of 176.3 million pounds made in 2019, before the COVID-19 pandemic impacted trading.

Food sales increased 10.4 per cent on 2019, while clothing and home revenue was down 1 per cent, with full price sales up 17.3 per cent.

M&S believes the pandemic has masked the progress management has made in its latest turnaround efforts after years of false dawns.

Chairman Archie Norman and CEO Steve Rowe have focused on transforming M&S’ outdated culture, improving the quality and value of its clothing and food products, while reshaping its store estate and investing in technology and e-commerce, including a venture with online supermarket Ocado (OCDO.L).

Shares in M&S, up 43 per cent so far this year, closed Tuesday at 194.5 pence, valuing the business at 3.8 billion pounds.