The comeback of Marks & Spencer is one of the more remarkable turnarounds.
Other major retail chains such as Debenhams and Topshop vanished from the High Street and shopping malls and pandemic upstarts ASOS and Boohoo are in the doldrums.
As broker Shore Capital colourfully noted, M&S chairman Archie Norman and now chief executive Stuart Machin ‘blew the bloody doors off’.
The numbers are impressive with pre-tax profits up 56 per cent at £325.6million in the six months to September, same store sales soaring and after a long absence there is a dividend.
We have become used to Next, which is notably cautious, upgrading its forecasts.
Revival: Marks & Spencer pre-tax profits up 56% at £325.6m in the six months to September, same store sales soaring and after a long absence there is a dividend
But for M&S it is a refreshing phenomenon with a full year projection of £640million up from £575million. Long suffering private investors (including this writer) have reason to be upbeat.
Much of the focus in M&S’s revival will be on the store renewal programme – the switch from underperforming stores on high streets to sites in better shopping venues such as Trafford Park and Lakeside.
The quest for better stores is symbolised by the battle over the Marble Arch development with Machin taking Michael Gove’s decision to rescind planning permission on Oxford Street to judicial review.
The supply chain is being spruced up, delivering cost savings. Food innovation continues at pace and anyone in an M&S food hall could not but be impressed by the quality, British sourcing and footfall.
On the fashion side, the core of the enterprise, the smarter brands Jaeger, Autograph and Per Una are making a real splash.
What is really encouraging is that younger shoppers, who in the past thought M&S is for parents and grandparents, are now engaged. The average age of customers is coming down fast.
Among the biggest changes of the Machin era is culture. Colleagues at all levels are having a much bigger say in strategy and that must be good for productivity.
Nobody should think that the best of the recovery is over.
In the weeks since the end of the first half, M&S has been shooting out the lights in terms of market share and volumes. There must be more to come.
Ocado retail, bought by Norman, has been a disappointment. Machin believes that with Hannah Gibson leading the charge it will eventually be a growth engine. Moreover, the store renewal programme is going at pace.
Each time there is an upgrade in location and shopping experience, Liverpool is a good example, revenues climb sharply. That too augurs well.
Machin talks about being ‘positively dissatisfied’ reflecting his ambition. Investors clearly agree with a near-10 per cent jump in the share price.
Historically M&S enjoyed the highest rating of share price to earnings in Britain’s retail sector. That status was lost during two decades of underperformance.
Now there is a chance it can reclaim the highest ground.
Wider still and wider
Who said it was all over for Rolls-Royce and wide-bodied jets?
The engineering group’s shares are surging with a take-off driven by the Trent family of engines.
Leading the way are the Middle-East carriers, Japan, Europe and the rest of Asia. China remains strong in spite of a slight pullback.
Warren East managed to navigate Rolls out of its near financial demise in the pandemic.
A recovering market and robust cost cutting by successor Tufan Erginbilgic is driving a remarkable recovery.
There is much more to go for with global defence needs picking up and the great opportunity of Small Modular Reactors (SMRs) at home and overseas using Rolls-Royce turbines currently powering in submarines.
As cash flow picks up and the upgrades roll in the shares are flying higher.
One UK emblematic brand losing momentum is broadcaster ITV.
Revenues were up in the first nine months of the year, in spite of a dip in advertising, but the growth engine of studios is doing less well than expected.
Over the longer haul betting on content in the era of streaming must be the right thing.
On the brighter side, ITVX, only a year old, is confounding the naysayers and building digital revenues.
The negativism is overcooked.