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Marks & Spencer posts robust FY results, but warns of challenges ahead following Russia exit

By Huw Hughes

25 May 2022

Business

Image: Marks & Spencer

Marks & Spencer has reported strong revenue growth in the year to April 2 as it swung to a profit, but warned of broadly flat profit for the year ahead after closing its Russian business and amid rising inflation.

In the 12 months to April 2, revenue at the British retail giant came in at 10.89 billion pounds, up 18.7 percent compared to the previous year and up 6.9 percent compared to two years ago, prior to the impact of the pandemic.

Clothing & Home sales were up 3.8 percent compared to two years ago, before lockdowns.

The retailer swung to a profit before tax of 391.7 million pounds compared to a loss of 209.4 million pounds a year earlier.

Strong start to current year

The company said overall trading in the first six weeks of the financial year has been ahead of the comparable periods in 2021/22, with a “particularly strong performance” in its Clothing & Home division.

Outgoing CEO Steve Rowe told investors: “When I took over the reins at Marks & Spencer six years ago, I committed to tackling the underlying issues that had eroded the strength of the business and building the foundations for future growth.

“For me, what is important about these results is not just the restoration of profit and strong cash flow; it is that they demonstrate that Marks & Spencer has fundamentally changed. While there is much more to do, the business has moved beyond proving its relevance and has the opportunity for substantial future growth.”

Despite the strong full-year results, Marks & Spencer said it expects broadly flat profit for the year ahead following its decision to exit Russia, which it said will cost it 31 million pounds.

Additionally, increasing inflation and tightening customer purse strings will impact the business. “We expect these pressures to increase as the year progresses,” it said. “We are therefore planning for an adverse impact on volumes due to price inflation, slowing the rate of sales growth.”

MARKS&SPENCER