Daily Stock Market Reports

Live news: Ocado Retail warns of slowing sales growth as costs pinch margins

Retailer Marks and Spencer has warned that the squeeze on UK consumers’ incomes will hit profit growth this year.

Trading has been encouraging since early April but it expects the financial pressures on customers to deepen over the rest of the year, one of Britain’s best known retailers said on Wednesday.

“We expect the decline in real incomes to sharpen in the second half and endure for at least the remainder of the financial year,” the FTSE 250 retailer said in its full-year earnings statement.

M&S said that a combination of the cost of investing in new capacity at Ocado retail, the absence of £102mn of Russian sales and a lack of relief on business rates means it has started the current financial year at a “lower adjusted profit base”.

“Given the increasing cost pressures and consumer uncertainty we do not currently expect to progress from this lower profit base in 2022/23,” the retailer added.

The cautious outlook from M&S comes after chief executive Steve Rowe, who steps down this month after six years, had made progress in reviving the group’s fortunes.

A better performance from its revamped food business and improved sales of clothing and homewear allowed the retailer to twice upgrade its forecasts for its last financial year, which ended in early April.

In the 12 months to April 2, M&S reported pre-tax profit, excluding some items, of £522mn, matching analysts’ forecasts and up from £50mn in the previous financial year. Revenues were £10.8bn, up 7 per cent from last year.

The retailer’s shares have shed nearly 43 per cent this year.

Read More: Live news: Ocado Retail warns of slowing sales growth as costs pinch margins

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