M&S to pay first dividend in four years after profits jump

M&S

Marks & Spencer has said it will resume dividend payments for the first time since 2019, as the retailer revealed profits rose by more than £150m in the first half of the year.

Wednesday’s announcement sent M&S shares up by 10pc in early trading, as better-than-expected food sales drove the firm’s profits to £360.2m – up from £205.5m during the same period last year.

Investors responded positively to M&S’ latest update despite chief executive Stuart Machin warning it will take at least three years to overhaul its joint venture with Ocado.

Mr Machin said he was “positively dissatisfied” with Ocado Retail after it posted losses of £23m in the first half of the year, compared to £700,000 in the same period in 2022.

He said: “We’re very positive about the potential of Ocado but I think that potential is going to be realised in three-plus years, not in the next 12 months or 24 [months].”

The Ocado grocery business is jointly owned by M&S and London-listed technology company Ocado Group.

As for revenues across the wider M&S business, Mr Machin revealed a stronger performance in its food, clothing and homeware divisions, where it hailed “surprisingly resilient consumer demand”.

In its supermarkets, sales were up 14.7pc in the six months to the end of September, with M&S saying it outperformed all mainline grocers.

It has been among the supermarkets pushing through major price cuts in a battle to lure cash-strapped shoppers.

M&S also recorded a 5.7pc sales increase in its clothing and home business.

According to Kantar figures, M&S was the biggest seller of womenswear in the summer for the first time in four years.

M&S’s overall share of the clothing & footwear market hit 9.5pc in September, compared to 9.3pc at the start of April, the data showed.

Mr Machin said: “We’ve sold more products and served more customers across food and clothing and home, with both businesses outperforming the market.

“Looking ahead, trading momentum has been maintained through October, with customers responding positively to our Christmas ranges.”

However, he suggested there could be “challenges and headwinds” in the coming months. M&S is expecting profits to be weighted towards the first half of its year.

It said: “The outlook remains uncertain with the probable impact on the consumer of the highest interest rates in 20 years, deflation, geopolitical events, and erratic weather.”

The warning over Ocado comes months after M&S bosses told shareholders they were “not happy” with the performance of the joint venture.

M&S chairman Archie Norman said in July that there was “work to do” to improve its performance.

The retail giant has been pushing for more of its products to be stocked on Ocado and for product launches to happen at the same time as in its stores.

On Wednesday, M&S said the Ocado business was now in the “early stages” of returning to profitability, with around 80pc of products now stocked in the online grocer’s store.

It said that while Ocado had “generated significant volume growth and buying benefits for M&S Food... the potential of the venture has yet to be realised”.