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Marks and Spencer is on track to re-enter the FTSE 100 after the UK retailer upgraded its annual profit outlook thanks to robust sales, sending shares up more than 7 per cent.
The company said on Tuesday that like-for-like clothing and home sales were up more than 6 per cent in the first 19 weeks of its financial year, with strong growth in stores, while food sales climbed 11 per cent.
“We now expect the outcome for the year to show profit growth on 2022-23, and the interim results to show a significant improvement against previous expectations,” M&S said. It had expected a modest growth in revenues and a slight decrease in profits for the financial year to April 2024.
Shares in M&S were up 7 per cent in early trading on Tuesday, taking their gains this year to more than 60 per cent. Its current market capitalisation of £4.3bn would qualify M&S as a FTSE 100 entrant — almost four years after it was demoted for the first time in its 139-year history.
To enter the blue-chip index, the company would need to rise to the 90th position or above. At market close on Friday August 11, the 90th ranked company had a market cap of £4.2bn, according to data from the London Stock Exchange.
“If the legs keep whirling in the right direction, then more material appreciation could follow, along with a return to the FTSE 100,” said Clive Black, research director at Shore Capital.
The next FTSE 100 and FTSE 250 reshuffle will happen on September 18, with the rankings based on market capitalisations as of market close on August 29. The LSE said it was “unable to speculate” about whether M&S would make the cut.
M&S’s upgrade is the latest evidence that the retailer is delivering on its long-promised recovery after two decades of failed reinventions.
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M&S chief executive Stuart Machin, who succeeded Steve Rowe, has been spearheading a turnaround of the chain in tandem with chair Archie Norman and co-chief executive Katie Bickerstaffe.
Its food business has benefited from more choice, lowering prices across its Remarksable range and the refurbishment of some stores to attract more customers. It has also refined its clothing and home offering since former Tesco executive Richard Price joined in 2020 to run it, with strong sales of beachwear, swimwear and linen between April and June.
Profits rose to £475.7mn from £391.7mn for the year to April 2023, while sales rose 9.9 per cent to almost £12bn.
M&S’s unscheduled update follows recent upbeat statements from other UK retailers including Primark and Next.
