Higher profits and dividend boost lift Marks and Spencer share price

The Marks and Spencer (M&S) share price has been on a good run of late since hitting a two-year low of 92p last October, and this progress has continued today after the company delivered a bumper set of full year numbers and touted the return of the dividend in 2024.

There has been much optimism around the turnaround plan that was started by previous CEO Steve Rowe, and which has been carried on by new incumbent Stuart Machin, with both food and general merchandise performing well.

The shares are still well below the peaks we saw early last year with perhaps a little too much pessimism baked into the share price after the falls from last years peaks of 263p.

At the start of this year the company reported Q3 numbers that were broadly better than expected despite tough trading conditions, increasing optimism that the progress that has been made over the past few years would continue.

Rising costs have been an increasing headwind for all retailers, however M&S has taken steps to streamline its supply chain with the completed acquisition of Gist in September last year helping in terms of streamlining costs through its food supply chain, helping to boost margins there, with an expectation that this will save £50m in costs over 4 years.

Today’s full year results have seen this pay off as statutory revenue rose by 9.6% to £11.93bn, £1bn higher than last year and well above expectations of £11.7bn, with a strong performance from both food and general merchandise.

Food sales rose 8.7% to £7.2bn, while the performance in clothing and home also improved, rising by 11.5% to £3.7bn.

While operating profits before adjusting items came in lower, the headline numbers saw profits after tax increase by 18% to £364.5m, with M&S management raising the prospect of a return of the dividend in the upcoming fiscal year.

M&S has also been investing in its store real estate, capex spending rising to £402.88m this year, with extra spend of £70.5m in remodelling various food stores and upgrading clothing and home spaces.