Marks & Spencer shelves decision on dividend resumption as uncertainties grow

By Geoffrey Smith 

Investing.com -- Marks and Spencer (LON:MKS) said it had put off a decision on resuming shareholder payouts until closer to the end of its fiscal year, citing the high-level uncertainty over the U.K. economic outlook.

The company's profit fell 23% to £205 million (£1=$1.1525) in the six months through September, as it absorbed a good part of a broad rise in input costs across its offerings. Its food delivery joint venture with Ocado (LON:OCDO) swung to a net loss of £700,000, as consumer behaviors reverted to pre-pandemic patterns, even as the company invested in adding capacity for the long term.

Even so, the High Street stalwart maintained its profit guidance for the full year after saying it had begun the key holiday quarter "well", with Clothing&Home sales up 4.2%, Food sales up 3.0%, and International up 4.1%. It posted a respectable 8.5% rise in revenue and cut its net debt by another 7% to £2.93 billion by the end of September. 

In the near term, it said it expects the upcoming soccer World Cup to support food and drink sales, but echoed other U.K. retailers in saying that unseasonably warm weather had delayed the usual uptick in sales of new autumn and winter clothing collections. 

Further out, it warned that  "across all M&S markets it is highly likely that conditions will become more challenging" in the year through March 2024, saying that even its radical revamp over the last few years only offered "some insulation from the gathering storm." 

It noted that it wants to accelerate plans to cut its department store count to around 180 within five years, from 248 currently, freeing up resources for the expansion of its food and drink operations.

M&S also put off a decision about resuming shareholder payouts for a few more months, indicating that it wanted to see how the key Christmas shopping period played out first. 

"Given the macro outlook the board will defer consideration of capital allocation policy and options for reinstating capital returns to shareholders until nearer the year end," it said.

Marks&Spencer shares fell 1.2% in early trading on Wednesday, underperforming a FTSE 250 index that edged down only 0.2%.