British retailer Marks & Spencer (OTC:) reported full-year profit growth of 58%, beating market expectations, thanks to strong sales in its food and clothing divisions.
The company also expressed confidence in continuing its current progress into the new fiscal year, lifting its shares more than 7% in premarket trading on Wednesday.
For the 2024 financial year, M&S reported pre-tax and adjusted profits of £716.4 million ($913 million), beating consensus estimates of £665 million to £705 million and well ahead of profits of 453 .3 million pounds sterling, registered in 2022. 23.
Sales rose 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 clothing, homeware and food over the next five years, to 2027/28.
The company aims for adjusted operating profit of more than 10% in the apparel and home segment and more than 4% in the food segment. In 2023/24, the company achieved these profitability targets, with food margins of 4.8% and clothing and home margins of 10.3%.
Following the publication of the report, Morgan Stanley analysts reiterated their “Overweight” rating on the company’s shares and increased their estimates.
“We are revising the numbers upward, ahead of consensus by 4%. In terms of frequency, we expect earnings growth to be skewed towards the second half of the year due to the timing of investments,” the analysts wrote.
Specifically, Morgan Stanley raised its base EBIT forecast by 1% for FY25/26, placing its estimate 3% above consensus. Moreover, their base PBT estimates were raised to £760 million for FY25e, 4% above the consensus forecast.