M&S Half-Year Report 2023
Strong trading performance
- Profit before tax & adjusting items £205.5m (2021/22: £269.4m)
- Food sales up 5.6%; strong growth in franchise & hospitality, with other categories well ahead of 19/20
- Food adjusted operating profit £71.8m reflecting value investment and cost pressures
- Clothing & Home sales1 up 14.0% with store sales up 18.8%, online up 4.9% against strong comparatives
- Clothing & Home adjusted operating profit £171.4m; reflecting strong sales growth and full price mix
- Ocado Retail loss of £0.7m (2021/22: profit £28.1m) as demand reverts and capacity grows
- International constant currency sales up 13.7%; operating profit before adj. items £39.0m
- Statutory profit before tax of £208.5m (2021/22: £187.3m)
M&S FOOD SALES OUTPERFORMANCE OFFSET BY VALUE INVESTMENT AND COST PRESSURES
M&S Food outperformed the market on both value and volume, but operating profit declined. We delivered resilient sales growth of 5.6%, with LFL sales growth of 3.0%, in a period of market-wide cost and price pressure. The business generated particularly strong growth in hospitality and franchise sales compared with last year. Sales excluding these areas grew 1.9% but remain substantially ahead of preCovid levels in line with our strategy to broaden the reach of the business.
Operating profit before adjusting items was £71.8m as compared to £124.0m in 2021/22 excluding £19.7m of business rates relief received in the prior period. The combination of investment in value and a first half weighted increase in operating costs led to the reduction in margin to 2.2%, although this improved through the period (Q1 2.0%, Q2 2.4%). A reduction in gross margin of 110bps reflected continued investment in quality and price.
- M&S Food did not pass through the full effect of inflation in its cost of goods. This ran at 11% in the period, which – net of cost reduction and product mix – impacted the overall gross margin by c.70bps.
- As demand patterns changed, waste and stock loss also increased at the start of the period
although these have now normalised.
