Half-year results show M&S Food and Ocado profits drop

The retailer said trading would become “more challenging” after it revealed its profits dropped by 24%.

It said “all parts” of retail would be affected by the UK’s economic climate, adding unviable firms would go bust.

The high street giant said M&S Food outperformed the market on both value and volume, but operating profit declined. Operating profit before adjusting items was £71.8m as compared to £124.0m in 2021/22 excluding £19.7m of business rates relief received in the prior period.

Sales at its online food delivery business Ocado fell 4.2% and it dropped to a £0.7m loss as some shoppers returned to high streets following periods of lockdown.

However, the retailer said: “While we are therefore planning on a material contraction in market demand, the M&S customer may prove more resilient than some market commentators assume.”

“A high proportion of these are in above average paid jobs or retired. Despite the recovery in demand since the pandemic and return to travel these age groups shielded more and many retain a savings cushion.”

Commenting on the results, Rosalind Hunter, partner at global consultancy Simon-Kucher & Partners, said: “Over the last year, M&S has had a rocky ride, with store closures and layoffs across the UK. Pressure on retail sales remains high as consumers cut back on discretionary spending and businesses see inflation, as well as operating and energy costs, undermining the bottom line—all of which we see reflected in today’s results.”

“However, since the summer, M&S has seen a recovery in its clothing range; it has also rolled out a model for growth by strengthening its senior management team, launching concept stores and delivering new lines. And, despite weakness in recent years, its brand name still resonates with a large section of the UK public.”