Operating profit at Marks & Spencer’s Republic business seen increasing

Retailer Marks & Spencer reported a much better-than-expected 75 per cent rise in first-half profit but cautioned the combination of high borrowing costs, erratic weather and geopolitical events may soon weigh on shoppers.

The 139-year-old clothing and food group, which also employs 1,900 staff across its store network and support centre in the Republic, said its trading momentum had been maintained through October and it was planning for a good Christmas, with customers already responding positively to its ranges.

While the retailer does not specifically break out its Irish numbers, a presentation for investors published on its website implies the business in the Republic reported operating profit before exceptional items of £11 million (€12.6 million) for the period compared to £7.3 million a year earlier. Implied revenue stood at £148.1 million, up from £144.4 million.

But for the group overall it cautioned the economic outlook remained uncertain and flagged the impact on the consumer from the highest interest rates in 20 years, deflation, geopolitical events and erratic weather.

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M&S reported profit before tax and adjusting items of £360.2 million (€413.8 million) for the six months to September 30th, versus analysts’ average forecast of £276 million and £205.5 million made in the same period last year.

Its international sales, which includes the Irish business, were 3 per cent higher at £511.3 million. Excluding the Republic of Ireland, that figure was £363.2 million.

Operating profit for the international business was 11.3 per cent higher at £43.4 million, driven by operating cost savings within its logistics. The company also achieved better efficiency by shifting European volume to its new distribution hub in Croatia.

Accounts for the Irish arm of the business filed by the company earlier this year showed it returned to profit last year despite the twin impacts of Brexit and the pandemic. Marks and Spencer Ireland made a pretax profit of €31.2 million for the 52 weeks up to April 2nd last year, compared to a loss of €13 million for the preceding period.

The company generated sales of €325 million for the period, up from €294 million previously. - Reuters

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