Marks & Spencer May Beat Profit Goal on Record Christmas

(Bloomberg) -- Marks & Spencer Group Plc raised its earnings guidance slightly after record sales of food over Christmas, defying fears that omicron would dent demand. 

• The British clothing and food retailer, which has already upgraded its outlook twice, expects profit to at least reach its previous guidance of about 500 million pounds ($685 million) this fiscal year. Analysts already were expecting M&S to exceed that. 

Key Insights

• The chain said its clothing and home division, a long-time problem for the group, performed well with a second successive quarter of growth. M&S, a household brand with hundreds of stores across Britain, has been struggling for years with a business dogged by too many expensive shops and a clothing division often dismissed as old-fashioned. 
• The turnaround finally seems to be making headway and M&S said full-price apparel sales increased by 45% while online sales in that division continued to be strong.
• Food sales rose 12% as the surging omicron cases encouraged more people to celebrate the holidays at home rather than at restaurants. M&S said it’s also benefiting from its retail joint venture with web grocer Ocado Group Plc.
• Last week, M&S’s fierce rival Next Plc lifted its profit forecast for the fifth time after particularly good sales of formal clothing and party dresses.

Market Reaction 

• The shares fell as much as 3.9% Thursday morning, having nearly doubled in the past 12 months.

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