Marks & Spencer’s recovery finally looks like the real deal
M arks & Spencer over the past 20 years has been a tale of false dawns for its shareholders. Every apparent advance has been followed by a declaration from the boardroom that even vaster sums must be spent on overhauling warehouses, improving stores, closing stores, investing in food logistics, revamping clothing, or something else. It is, therefore, dangerous to say the long struggle against obsolescence has succeeded. But that’s the way it looks.
Wednesday’s annual pre-tax profit numbers depended on how you cut them: up a fifth in statutory form; down by 8% at £482m in “adjusted” variety; and better at an “underlying” level if one ignores the Covid freebie on business rates a year ago. In essence, though, all versions were a couple of notches above City forecasts.
More significantly, management thinks it can get within £10m of the same underlying outcome this year, which is several grades above previous expectations. The shares gained 12% in a falling market and, at 184p, now stand at their highest level for 15 months. New-ish chief executive Stuart Machin’s boast about” “trading momentum” looks fair.
How’s it been done? None of it sounds overly complicated. On the clothing side, Machin’s predecessor ditched many of the tired and confusing in-house brands to make way for deeper ranges of popular lines, supplemented by third-party brands; fashion editor columns on what M&S gets wrong have been notable by their absence recently. In food, the “remarksable value” slogan is teeth-grinding but there’s something to be said for hooking shoppers with Tesco-priced butter, milk and eggs and getting them to pick up the fancier stuff at the same time.
Why didn’t M&S try simplicity before now? The answer is probably that the job is
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