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Marks and Spencer regains momentum, market applauds

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Marks and Spencer, which has long been in decline, announced Friday a jump in food and clothing sales, which allowed it to raise its sales targets and made its stock price soar.

As long in decline, Marks and Spencer announced a jump in sales in food and clothing, which allows the company to rethink its expectations.

According to a statement, the group sees “clear confirmation” of the benefits of a restructuring plan it launched more than a year ago due to the pandemic.

The company has closed stores and announced the elimination of 7,000 jobs in order to stem traffic declines and adapt to new consumption patterns.

In the first four months of its offbeat fiscal year (i.e., from the beginning of April to mid-August), its sales grew by 29.1% year-over-year and by 4.4% compared to the same period in 2019, before the health crisis.

The group contends it is performing better than the market in food and explains its savings program has allowed it to offset an increase in supply costs as well as not having staff. For several months, it has been selling its products online through the Ocado Group.

The clothing and home goods division, which has been the Achilles’ heel of the brand, is in recovery, although its sales are still lower than in 2019. The retailer has decided to limit its product range, run fewer promotions and emphasize online sales.

As for its international business, it was up sharply year over year, despite supply issues related to Brexit in Ireland and France and containment in India.

Restored confidence
With its improved performance, the group is more confident for its 2021/22 fiscal year (ended in March). The company anticipates that its adjusted pre-tax profit will exceed the range targeted so far of between 300 and 350 million pounds (375 and 440 million francs).

For Danni Hewson, an analyst at AJ, “this is just the beginning” to see the effects of the restructuring but it is “encouraging news”, illustrated by the fact that this is the first time in years that the group has published activity figures that were not on the agenda.

“Investors had become accustomed to being disappointed by the retailer” which “has struggled to keep up with changes in consumption patterns”, he recalls.

For MetaNews.

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Jonathan Hobbs

Jonathan Hobbs is an Australian investor and author that trades on a variety of asset classes, including currencies, equities, and commodities. Jonathan’s experience as a macro trader leverages his unique writing style to combine important elements, such as technical analysis and news. The other elements that he brings into his unique writing styles are foundation analysis aimed at rational equilibrium values, evaluating the sizes and motivations of buyers and sellers, as well as identifying the needs of the buyers and sellers in the individual markets. Jonathan is committed to quality writing for new traders as well as veterans.

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