Net profit dropped 8.5 per cent to STG228.3 million pounds ($A416.72 million) in the six months to late September compared with the equivalent period in 2013, M&S said in an earnings statement on Wednesday.
Underlying pre-tax profit rose 2.3 per cent to STG268 million pounds in the latest reporting period. The better than expected result sent M&S shares surging to the top of London’s FTSE 100.
“Within clothing, womenswear performance continues to improve with growth in full price sales and increasingly positive feedback from our customers,” the statement said.
“However, the recent market conditions remain challenging, with unseasonal weather resulting in high levels of promotional activity across the market. We expect our food business to continue to outperform the market with a higher number of new Simply Food stores planned over the next three years, up to 200 from 150 previously guided,” it added.
The group’s share price surged 6.33 per cent to STG430.3 pence on the benchmark FTSE 100, which was up 0.50 per cent at 6486.22 points in early deals.
“The profit beat (forecasts) and improvement to gross margins have taken investors by surprise, with the share price strongly ahead,” said Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers.
“Gross margin has shown a strong improvement, in part due to the tight control of costs which M&S is currently undertaking,” he noted.