Investing.com -- Marks & Spencer (LON:MKS) has reported stronger-than-expected half-year results, sending its shares higher.
At 4:13 am (0813 GMT), Marks & Spencer was trading 4.8% higher at £402.
For the first half of the fiscal year, the UK retailer delivered an underlying profit before tax (PBT) of £408 million, exceeding analyst consensus by about 14%.
This was driven largely by its food division, which has been a standout area for the company.
“We think M&S has been making good progress with its Food business, helped by an improved value for money perception, while its Clothing offer has benefitted from a stronger digital offer, third-party brands and a better bought range, with improvements in style, quality and value perception,” said analysts at RBC Capital Markets in a note.
H1 sales totaled £6.5 billion, in line with previous forecasts, while underlying EBIT came in at £463 million, beating expectations of £427 million.
Underlying PBT for the period was £392 million, compared to the £365 million initially anticipated by analysts, with consensus pegging the figure at £359 million.
Adjusted EPS were 14.7p, comfortably ahead of the forecast of 11.5p. UK Food sales reached £4.2 billion, surpassing expectations of £4.1 billion, with EBIT of £213 million outpacing the £176 million forecast.
The clothing and home business also showed improvement, with sales of £2.0 billion.
While M&S’s international division showed a weaker performance, particularly in India, where results continued to lag, the retailer's share of losses from Ocado (LON:OCDO) Retail was in line with expectations, posting a loss of £16 million for the period.
M&S declared a dividend per share of 1.0p, consistent with its previous policy of paying one-third of the annual dividend at the half-year mark.
Despite some challenges in international markets, Marks & Spencer remains confident in its outlook. The company indicated that trading in the first five weeks of the second half of the year is on track, with further progress expected.
“We think that Food performance has likely remained strong, but we expect some volatility in C&H given warmer weather in recent weeks,” said analysts at RBC Capital Markets.