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(Bloomberg) — Marks & Spencer Group Plc expects annual profit to exceed the level seen before the British fashion and food chain was knocked off course by a cyberattack last year.
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Adjusted pretax profit will resume growth this financial year and surpass the £875.5 million ($1.2 billion) posted in the 12 months ended March 2025, which was the highest level in more than 15 years, the retailer said Wednesday.
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Shares of M&S rose as much as 4.7% in early trading in London. They were down about 11% over the past year to Tuesday’s close.
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Chief Executive Officer Stuart Machin is pushing ahead with his turnaround plans and the business is boosting its online presence and expanding overseas. Investors were looking for evidence the retailer was back on course after online sales were disrupted for almost four months.
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The 24% drop in adjusted pretax profit in its latest full year — which included the cyberattack — was slightly better than analysts expected after a strong second half. Food sales rose 7%, while fashion and homeware fell 7.7%.
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“The strength of M&S’s underlying strategy — particularly the continued expansion of its food business — enabled the retailer to recover lost ground rapidly once operations normalised,” said Robyn Duffy, consumer markets analyst at RSM UK.
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M&S is seeking to double its online sales, and this month bought a logistics warehouse from online retailer Asos Plc for £67.5 million.
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It has also taken steps to grow internationally, launching its clothing range in Nordstrom department stores in the US in March. This follows its fashion expansion to Australia last year selling in David Jones stores and building its partnership with Zalando SE to speed up delivery to customers in Europe.
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Still, M&S is contending with weaker consumer sentiment in its home market and increased costs due to the conflict in the Middle East. The war is forcing retailers to absorb higher costs across energy, production and shipping.
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M&S said its international business may be constrained in the year ahead due to disruption to deliveries to its partners in the region, where annual sales in the most recent financial year were around £100 million.
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Rival Next Plc raised its profit and sales outlook this month, despite higher costs related to the Middle East, on robust demand at the start of the year.
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(Updates with shares in third paragraph, analyst comment in fifth.)
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