Marks & Spencer has declared the group is in its strongest financial health for nearly 30 years as a turnaround pays off with a 58% surge in profits and buoyant sales across its food halls and clothing arm.
Boss Stuart Machin said he was seeing “the beginnings of a new M&S” thanks to revival efforts, which helped the retail bellwether to post better-than-forecast annual underlying pre-tax profits of £716.4 million, up from £453.3m the previous year.
But despite the profit leap, the group said it was ramping up cost-cutting to help offset a soaring wage bill, earmarking another £100m in savings, taking the total to £500m by 2027-28.
The group said it “ended the year in the strongest financial health since 1997”, with Mr Machin saying the group now had the “wind in our sails”.
M&S has undergone a significant turnaround plan in recent years, including heavy cost-cutting and store closures, with previous attempts to regain its former glory having fallen short of the mark.
The retailer currently employs around 2,500 people across 22 stores in Northern Ireland.
While Mr Machin insisted the job was not yet done, he said the current revamp efforts were working, with M&S now attracting a younger audience, particularly with its lingerie ranges.
More than 60% of the UK adults are now shopping with M&S, according to the group.
Mr Machin said: “Two years into our plan to ‘reshape for growth’ we can see the beginnings of a new M&S.
“Food and Clothing and 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.”
It notched up an 11.3% hike in like-for-like food sales over the year to March 30, with growth of 5.2% across its clothing and home arm.
M&S said it was focusing on driving sales by volume higher as inflation falls back, with prices increasing by around 1.6% in food and remaining flat on clothing and home ranges.
But he added that “there remains much work to do”, in particular with its international business, where underlying earnings tumbled 10.8% over the year.
The firm also revealed that it was stripping out further costs, largely in its supply chain, in the face of an £89m investment in store staff pay.
And the group cautioned that profitability at its Ocado Retail joint venture was “well below the original business plan and expectations”, but that it was working closely with partner Ocado to “reset the business” and drive customer and sales growth.
It was revealed earlier this year that Ocado could take legal action against M&S unless they reach agreement over the final instalment of £190.7m as part of the payment for the £750m 50-50 Ocado Retail tie-up, which was launched in 2019.
Mr Machin said for M&S “it’s pretty clear” that performance targets under the agreement have not been met, but insisted the dispute “doesn’t interrupt us in the day-to-day running” of the Ocado Retail business.
