Marks and Spencer will double its shareholder payout to 8.4p for the full year, up from 4.2p, after reporting a significant rebound in profits and surging food sales. The company said half-year profits reached £335.1 million for the 26 weeks to September 26, a dramatic recovery from £3.4 million in the previous year. The turnaround comes after M&S mostly recovered from a cyber attack that had disrupted its operations. Food sales climbed to £5.1 billion in the second half of the year, representing a 13.9 per cent increase compared to the same period previously.
The retailer is preparing for what it describes as an 'unforgettable' festive season after launching its Christmas campaign. M&S has ambitious plans for the medium term, targeting 'mid-to-high single-digit sales growth' whilst aiming to grow profits ahead of sales. The company intends to double its food sales, expand its international presence and increase the online share of its fashion, home and beauty range to 50 per cent of total sales. M&S shares rose 0.27 per cent following the announcement, bringing gains for the year to 33 per cent.
Grocery market data showed M&S increased food sales by 14.6 per cent in the 12 weeks to November 1, the largest increase among major supermarkets. Food inflation rose slightly to 2.6 per cent in the four weeks to November 1, according to figures from Worldpanel by Numerator. Fraser McKevitt, head of retail and consumer insight at Worldpanel, said the direction of travel had changed, noting that household budgets have been squeezed by an increase to the energy price cap arriving as cold weather set in during October.
Chief executive Stuart Machin acknowledged some operational challenges. He flagged slower recovery in the clothing and beauty business, which had experienced the lasting impact of the cyber hack affecting certain core product lines. M&S also admitted that some customers complained about insufficient summer dresses with sleeves, while popular items sold out too quickly. Beyond retail operations, shoppers have been stocking up on essentials following the government's 'Be Ready' public awareness campaign, which encourages households to prepare for up to three days of disruption. Hand sanitiser sales jumped 83 per cent compared to the previous year, whilst bottled water and tinned and jarred goods sales rose 67 per cent and 37 per cent respectively.
For UK savers and investors, the doubled dividend payout means shareholders will receive significantly higher returns from their M&S holdings, reflecting the company's improved financial performance and management confidence in sustained recovery.