Shares in Marks & Spencer have surged after it bumped up its profit outlook following encouraging sales - but admitted stores are still struggling to recover after lockdowns.
The retailer pointed to clothing and home sales - increasingly made online - bouncing back to just below pre-pandemic levels as well as a big boost to food revenues as evidence that its turnaround plan was working.
M&S said the trading performance was likely to reflect pent-up demand and cautioned that substantial uncertainty over consumer demand remained while supply chain disruption was putting pressure on costs.
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However, assuming no further COVID-related restrictions on trading, at this early stage we expect adjusted profit before tax for the year to be above the upper end of previous guidance of £300-350m, the retailer said.
Shares rose by as much as 12% following the unscheduled trading update for the 19 weeks to 14 August.
M&S said: At the start of the year, continued restrictions across large parts of the M&S store portfolio meant that the trading outlook was highly uncertain.
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Since then, M&S has seen an encouraging performance providing confirmation that the transformation programme is on track.
The profits upgrade provided a rare shaft of optimism for the 137-year-old retailers shareholders after years of struggle to arrest its decline and a relegation in 2019 from the FTSE 100.
In its clothing and home division, M&S said it had seen a good recovery with revenue up 92.2% up on a year earlier and just 2.6% below pre-pandemic levels.
But there was a stark divide between the performance of stores - where sales were 19.8% lower than in 2019 reflecting the fact that many locations remain in slow recovery from the pandemic - and online - where they were 61.8% higher and now comprise 35% of all clothing and home revenues.
In May, M&S revealed that it was stepping up store closure plans as it reported a £201m pre-tax loss for the year to 27 March as a result of the pandemic.
The latest update showed food sales up by 10.8% on last year and 9.6% ahead of 2019.
M&S said cost-cutting was helping to mitigate the impact of supply chain disruption as well as increased staff absences - without saying whether this was down to self-isolation alerts.
International revenue was up 39.7% on last year and 5.2% down on pre-pandemic levels despite the impact of lockdowns in India and Brexit-related supply disruptions to Ireland and France - the latter an issue recently raised by chairman Archie Norman in a strongly-worded letter to the prime minister.
Earlier this week, M&S revealed that it has made its products available in over 150 countries for the first time via British Corner Shop, an online supermarket for expats.
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