Marks & Spencer shares jump as 2024 profit surges 58%

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Marks & Spencer shares jump as 2024 profit surges 58%
Credit: © Reuters.

British retailer Marks & Spencer (OTC: MAKSY ) reported a 58% increase in annual profit, surpassing market expectations, driven by strong sales in both its food and clothing divisions.

The company also expressed confidence in continuing the current progress in the new financial year, propelling its shares more than 7% in premarket trading Wednesday.

For fiscal 2024, M&S reported a profit before tax and adjusting items of £716.4 million ($913 million), exceeding consensus estimates which ranged between £665 million and £705 million, and was significantly higher than the £453.3 million profit recorded in 2022/23.

Sales increased by 9.4% to £13.1 billion, with food sales up 13.0% and clothing and home sales up 5.3%.

M&S aims to increase its market share by 1% in both the clothing & home and food divisions over the next five years to 2027/28.

The company targets adjusted operating margins of more than 10% in clothing & home and over 4% in food. It achieved these margin targets in 2023/24, with food margins at 4.8% and clothing & home margins at 10.3%.

In the wake of the report, analysts at Morgan Stanley reiterated an Overweight rating on the stock and hiked estimates.

“We revise numbers up, taking us 4% ahead of consensus. In terms of cadence, we'd expect profit growth to be skewed towards 2H due to timing of investments,” analysts wrote.

Specifically, Morgan Stanley has increased their underlying EBIT forecast by 1% for FY25/FY26e, placing their estimate 3% above consensus. Moreover, their underlying PBT estimates have been hiked to £760 million for FY25e, which is 4% ahead of the consensus.

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